For wallet infrastructure and custody solutions managing digital assets, threshold signatures enhance security by distributing the signing authority across multiple parties. No single entity has control over the entire private key, reducing the risk of unauthorized access. In the event that one key share is compromised, the assets remain secure as the attacker would need to obtain multiple key shares to perform a transaction.
Threshold signatures contribute to the security of oracles by requiring a subset of oracle nodes to agree on the data before it is accepted and used by smart contracts. This reduces the risk of a single point of failure and makes it more difficult for attackers to compromise the integrity of the data
By distributing the signing authority across multiple nodes in the bridge network, threshold signatures ensure that no single node can unilaterally approve transactions. This reduces the risk of single points of failure and increases the security of cross-chain transfers, whilst also enhances privacy and security, as sensitive data is not exposed.