CIP1852 - HD Wallets for Cardano

CIP-1852/CIP-1852.md

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+---
+CIP: 1852
+Title: HD (Hierarchy for Deterministic) Wallets for Cardano
+Authors: Sebastien Guillemot <[email protected]>, Matthias Benkort <[email protected]>
+Comments-URI: https://forum.cardano.org/t/cip1852-hd-wallets-for-cardano/41740
+Status: Draft
+Type: Standards
+Created: 2019-10-28
+License: CC-BY-4.0
+---
+
+## Abstract
+
+Cardano extends the [BIP44](https://github.com/bitcoin/bips/blob/master/bip-0044.mediawiki) by adding new chains used for different purposes. This document outlines how key derivation is done and acts as a registry for different chains used by Cardano wallets.
+
+## Terminology
+
+### Derivation style
+
+Cardano does not use [BIP32](https://github.com/bitcoin/bips/blob/master/bip-0032.mediawiki) but actually uses [BIP32-Ed25519](https://cardanolaunch.com/assets/Ed25519_BIP.pdf). The `-Ed25519` suffix is often dropped in practice (ex: we say the Byron release of Cardano supports [BIP44](https://github.com/bitcoin/bips/blob/master/bip-0044.mediawiki) but in reality this is BIP44-Ed25519).
+
+The Byron implementation of Cardano uses `purpose = 44'` (note: this was already a slight abuse of notation because Cardano implements BIP44-Ed25519 and not standard BIP44).
+
+There are two (incompatible) implementations of BIP32-Ed25519 in Cardano:
+
+1) HD Random (notably used initially in Daedalus)
+2) HD Sequential (notably used initially in Icarus)
+
+The difference is explained in more detail in [CIP3](../CIP3)
+
+## Motivation
+
+For Cardano, we use a new purpose field `1852'` instead of `44'` like in BIP44. There are three main reasons for this:
+
+1) During the Byron-era, `44'` was used. Since Byron wallets use a different algorithm for generating addresses from public keys, using a different purpose type allows software to easily know which address generation algorithm given just the derivation path (ex: given `m / 44' / 1815' / 0' / 0 / 0`, wallet software would know to handle this as a Byron-era wallet and not a Shelley-era wallet).
+2) Using a new purpose helps bring attention to the fact Cardano is using `BIP32-Ed25519` and not standard `BIP32`.
+3) Using a new purpose allows us to extend this registry to include more Cardano-specific functionality in the future
+
+`1852` was chosen as it is the year of death of Ada Lovelace (following the fact that the `coin_type` value for Cardano is `1815` for her year of birth)
+
+## Specification
+
+Using `1852'` as the purpose field, we defined the following derivation path
+
+```
+m / purpose' / coin_type' / account' / chain / address_index
+```
+
+Here, `chain` can be the following
+
+| Name           | Value | Description
+|----------------|-------|-------------
+| External chain | `0`   | Same as defined in [BIP44](https://github.com/bitcoin/bips/blob/master/bip-0044.mediawiki)
+| Internal chain | `1`   | Same as defined in [BIP44](https://github.com/bitcoin/bips/blob/master/bip-0044.mediawiki)
+| Staking Key    | `2`   | See [CIP11](../CIP11)
+
+Wallets **MUST** implement this new scheme using the master node derivation algorithm from Icarus with sequential addressing (see [CIP3](../CIP3) for more information)
+
+## Copyright
+
+This CIP is licensed under [CC-BY-4.0](https://creativecommons.org/licenses/by/4.0/legalcode)