How Theft Shield Works¶

This page provides a technical deep dive into Theft Shield's protection mechanism.

The RBF Race¶

When a transaction is broadcast to the Bitcoin network, it enters the mempool (memory pool) where it waits to be included in a block. During this time, the transaction can be replaced by a conflicting transaction that:

Spends the same inputs (UTXOs)
Pays higher fees

Miners generally prefer higher-fee transactions, so the replacement is more likely to be confirmed.

Full RBF Support

The Bitcoin network majority now supports full RBF (Replace-By-Fee), meaning any unconfirmed transaction can be replaced—even if it doesn't signal opt-in RBF. This makes Theft Shield highly effective, as attackers cannot prevent replacement by simply not signaling RBF.

The Attack Scenario¶

Timeline of a theft attempt:

T=0:    Attacker steals your seed phrase
T=1:    Attacker broadcasts tx sending funds to their address
        Fee: 10 sat/vB
T=2:    Vigil detects unauthorized tx in mempool
T=3:    Theft Shield broadcasts replacement tx to your safe address
        Fee: 50 sat/vB (higher fee wins)
T=10m:  Your transaction confirms, funds are safe

Pre-Signed PSBT Architecture¶

What is a PSBT?¶

A PSBT (Partially Signed Bitcoin Transaction) is a Bitcoin standard (BIP-174) that allows creating transactions in stages:

Creation - Define inputs and outputs
Signing - Add signatures from required keys
Finalization - Complete the transaction for broadcast
Broadcast - Send to the Bitcoin network

How Vigil Uses PSBTs¶

┌─────────────┐    ┌─────────────┐    ┌─────────────┐
│   Vigil     │───▶│   Your      │───▶│   Vigil     │
│   creates   │    │   hardware  │    │   stores    │
│   unsigned  │    │   wallet    │    │   signed    │
│   PSBT      │    │   signs     │    │   PSBT      │
└─────────────┘    └─────────────┘    └─────────────┘

Vigil generates a PSBT that spends your UTXOs to your safe address
You sign the PSBT with your hardware wallet
Vigil stores the signed PSBT securely
If theft is detected, Vigil broadcasts the PSBT

Security Guarantee¶

The signed PSBT:

Only sends to YOUR safe address (you verified this before signing)
Cannot be modified after signing (cryptographic guarantee)
Is only broadcast when theft is detected

Multi-Round Fee Strategy¶

Theft Shield uses a multi-round approach to outbid attackers:

Round System¶

Round	Fee Rate	Purpose
1	Low	Initial response, catches low-effort attacks
2	Medium	Escalation if attacker responds
3	High	Strong response for persistent attackers
4	Maximum	All-out defense using remaining budget

How Rounds Work¶

Attacker broadcasts: 10 sat/vB
  ↓
Vigil Round 1: 25 sat/vB
  ↓
Attacker responds: 30 sat/vB (if they're watching)
  ↓
Vigil Round 2: 50 sat/vB
  ↓
Attacker responds: 55 sat/vB
  ↓
Vigil Round 3: 100 sat/vB
  ↓
Transaction confirms (defender wins)

Fee Budget Exhaustion¶

If your fee budget is exhausted before the attacker's, they may win the RBF race. Higher fee budgets provide stronger protection.

Detection Mechanism¶

What Triggers Protection¶

Theft Shield activates when we detect:

A transaction spending your monitored UTXOs
That is NOT sending to whitelisted addresses
That you did NOT authorize

Whitelist Protection¶

Legitimate transactions are protected by your whitelist:

Addresses you mark as trusted
Your own wallet addresses (auto-detected)
Explicit whitelisted destinations

Learn about whitelisting →

False Positive Prevention¶

We minimize false positives by:

Requiring explicit UTXO coverage in PSBTs
Checking against your whitelist first
Only broadcasting when confident in theft detection

Broadcast Timing¶

Speed is Critical¶

The faster we broadcast, the less time the attacker has to respond:

Response timing depends on network conditions and system load. In general, Theft Shield is designed to respond quickly once an unauthorized transaction is detected.

Network Propagation¶

After broadcast, our transaction propagates through the Bitcoin network. We broadcast to multiple nodes simultaneously to maximize propagation speed.

Limitations¶

Theft Shield Cannot Protect Against¶

Scenario	Reason
Immediate confirmation	No time for RBF if attacker's tx confirms in next block
Lucky attackers	A sophisticated attacker able to keep increasing fees and get their transaction confirmed before we can broadcast ours
High fee attacks	Extremely high fees that exceed our budget

Mitigations¶

Higher fee budgets - More resources to outbid attackers
Timely PSBT updates - Keep PSBTs current when UTXOs change
Layered security - Theft Shield + strong key security

Technical Details¶

Transaction Structure¶

Theft Shield transactions:

Spend ALL monitored UTXOs in the wallet
Send to a single output (your safe address)
Use P2WPKH for the safe address (efficient)
Signal RBF (BIP-125)
Include appropriate fee for the current round

Signature Type¶

SIGHASH_ALL - Signs all inputs and outputs
Prevents any modification after signing

Nonce Security¶

Each PSBT uses unique nonces to prevent signature reuse attacks.

Next: Setup Wizard →