Securing Your Stake Pool Using a Hardware Wallet

You can secure your pool pledge account and pool reward account using a Trezor or Ledger Nano S/X hardware wallet. Credits to angelstakepool for documenting the procedure.

Critical Reminder: After adding a 2nd pool owner using a hardware wallet, you must wait 2 epochs before you transfer pledge funds from your CLI Method or Mnemonic Method wallet to hardware wallet. Do not transfer any funds earlier because your pool pledge will not be met.

First, delegate your 2nd pool owner to your stake pool with Daedalus or Yoroi or Adalite.io

Install cardano-hw-cli to interact with your hardware wallet.

local PC or block producer node

# Hardware Wallet works with Trezor and Ledger Nano S/X
# Reference https://github.com/vacuumlabs/cardano-hw-cli/blob/develop/docs/installation.md

cd $NODE_HOME
wget https://github.com/vacuumlabs/cardano-hw-cli/releases/download/v1.13.0/cardano-hw-cli_1.13.0-1.deb
sudo dpkg --install ./cardano-hw-cli_1.13.0-1.deb

Connect and unlock your hardware wallet on your local PC or block producer node.

To generate the verification key and hardware wallet signing file, type:

local PC or block producer node

cardano-hw-cli address key-gen \
  --path 1852H/1815H/0H/2/0 \
  --verification-key-file hw-stake.vkey \
  --hw-signing-file hw-stake.hwsfile

As needed, you can edit the value of the --path option to specify the derivation path to the key with which you want to sign. hw-stake.vkey is not sensitive and may be shared publicly. hw-stake.hwsfile does NOT contain the raw private key.

Copy hw-stake.vkey to your cold environment.

Update stake pool registration certificate to add your new hardware wallet owner, which will secure both your pool pledge account and pool reward account.

Tailor the below registration-certificate transaction with your pool's settings.

If you have multiple relay nodes, then change your parameters accordingly.

air-gapped offline machine

cardano-cli conway stake-pool registration-certificate \
    --cold-verification-key-file $HOME/cold-keys/node.vkey \
    --vrf-verification-key-file vrf.vkey \
    --pool-pledge 1000000000 \
    --pool-cost 170000000 \
    --pool-margin 0.10 \
    --pool-reward-account-verification-key-file hw-stake.vkey \
    --pool-owner-stake-verification-key-file stake.vkey \
    --pool-owner-stake-verification-key-file hw-stake.vkey \
    --mainnet \
    --single-host-pool-relay <dns based relay, example ~ relaynode1.pool.example.net> \
    --pool-relay-port 6000 \
    --metadata-url <url where you uploaded poolMetaData.json> \
    --metadata-hash $(cat poolMetaDataHash.txt) \
    --out-file pool.cert

👀 Notice the pool-reward-account and additional pool-ownerstake-verification-key-file lines point to hw-stake.vkey.

Example above is pledging 1000 ADA with a fixed pool cost of 170 ADA and a pool margin of 10%.

Copy pool.cert to your hot environment.

You need to find the tip of the blockchain to set the invalid-hereafter parameter properly.

block producer node

currentSlot=$(cardano-cli conway query tip --mainnet | jq -r '.slot')
echo Current Slot: $currentSlot

Retrieve the UTXOs available for your payment address and calculate the balance.

block producer node

# Retrieve the list of UTXOs available for your payment address
utxo_json=$(cardano-cli conway query utxo --address $(cat payment.addr) --mainnet)

# Initialize variables
tx_in=""
total_balance=0
txcnt=0

# Loop through the list of UTXOs
while read -r utxo; do
    # Retrieve the values for the current UTXO
    values=$(jq -r --arg k "${utxo}" '.[$k]' <<< "${utxo_json}")
    # Retrieve datum associated with the UTXO
    datum=$(jq -r '.datum' <<< "${values}")
    # Retrieve the reference script associated with the UTXO
    script=$(jq -r '.referenceScript' <<< "${values}")
	# If limits on spending the UTXO may exist, then skip the UTXO
    if [[ ${datum} == 'null' && ${script} == 'null' ]]
    then
        hash=${utxo%%#*}
        idx=${utxo#*#}
        utxo_balance=$(jq -r '.value.lovelace' <<< "${values}")
        total_balance=$((${total_balance}+${utxo_balance}))
        echo "TxHash: ${hash}#${idx}"
        echo "ADA: ${utxo_balance}"
        tx_in="${tx_in} --tx-in ${hash}#${idx}"
		txcnt=$((txcnt + 1))
    fi
done <<< "$(jq -r 'keys[]' <<< "${utxo_json}")"

echo
echo "Total available ADA balance: ${total_balance}"
echo "Number of UTXOs: ${txcnt}"
echo "Final --tx-in string:${tx_in}"

Run the build-raw transaction command.

block producer node

cardano-cli conway transaction build-raw \
    ${tx_in} \
    --mary-era \
    --tx-out $(cat payment.addr)+${total_balance} \
    --invalid-hereafter $(( ${currentSlot} + 10000 )) \
    --fee 200000 \
    --certificate-file pool.cert \
    --out-file tx.tmp

Calculate the minimum fee:

block producer node

fee=$(cardano-cli conway transaction calculate-min-fee \
    --tx-body-file tx.tmp \
    --tx-in-count ${txcnt} \
    --tx-out-count 1 \
    --mainnet \
    --witness-count 4 \
    --byron-witness-count 0 \
    --protocol-params-file params.json | jq -r '.fee')
echo fee: $fee

Calculate your change output.

block producer node

txOut=$((${total_balance}-${fee}))
echo txOut: ${txOut}

Build the transaction.

block producer node

cardano-cli conway transaction build-raw \
    ${tx_in} \
    --mary-era \
    --tx-out $(cat payment.addr)+${txOut} \
    --invalid-hereafter $(( ${currentSlot} + 10000 )) \
    --fee ${fee} \
    --certificate-file pool.cert \
    --out-file tx-pool.raw

Copy tx-pool.raw to your cold environment.

This multi signature transaction will be signed using witnesses.

You need the following 4 witnesses.

• node.skey

• hw-stake.hwsfile

• stake.skey

• payment.skey

Create a witness using node.skey,

air-gapped offline machine

cardano-cli conway transaction witness \
  --tx-body-file tx-pool.raw \
  --signing-key-file $HOME/cold-keys/node.skey \
  --mainnet \
  --out-file node.witness

Create a witness using stake.skey,

air-gapped offline machine

cardano-cli conway transaction witness \
  --tx-body-file tx-pool.raw \
  --signing-key-file stake.skey \
  --mainnet \
  --out-file stake.witness

Create a witness using payment.skey,

air-gapped offline machine

cardano-cli conway transaction witness \
  --tx-body-file tx-pool.raw \
  --signing-key-file payment.skey \
  --mainnet \
  --out-file payment.witness

Copy tx-pool.raw to local PC or block producer node, which is where your hardware wallet device is connected. Ensure your hardware wallet is unlocked and ready.

Create a witness using hw-stake.hwsfile

local PC or block producer node

cardano-hw-cli transaction witness \
  --tx-file tx-pool.raw \
  --hw-signing-file hw-stake.hwsfile \
  --mainnet \
  --out-file hw-stake.witness

Copy hw-stake.witness to your cold environment.

air-gapped offline machine

cardano-cli conway transaction assemble \
  --tx-body-file tx-pool.raw \
  --witness-file node.witness \
  --witness-file stake.witness \
  --witness-file payment.witness \
  --witness-file hw-stake.witness \
  --out-file tx-pool.multisign

Copy tx-pool.multisign to your hot environment.

Send the transaction.

block producer node

cardano-cli conway transaction submit \
    --tx-file tx-pool.multisign \
    --mainnet

Check your updated pool information on adapools.org which should now show your hardware wallet as a pool owner.

Important Reminder🔥 These changes take effect in two epochs. Do NOT transfer pledge funds to your hardware wallet until at least two epochs later.

After two epoch snapshots have passed, you can safely transfer pledge funds from your CLI Method or Mnemonic Method wallet to your new hardware wallet owner account. 🚀