Ledger now use BIP44 for accounts address derivation

[gre]

Hi, I'm gre from Ledger Live team.
Since Ledger Live release, Ledger is now derivating Ethereum and Ethereum Classic accounts by following BIP44 standard.

what changes

Ledger Ethereum Chrome Wallet used to derive only one address at m/44'/60'/0'/0 (NB: without the last /0 of BIP44).
MEW/MyCrypto have so far followed this idea that Ledger's "root" is at m/44'/60'/0' and therefore have chosen to derive pages of addresses by using m/44'/60'/0'/x (where x is a value from 0 to +inf)

in Ledger Live instead, the idea is to follow BIP44, which means the first address is derived on m/44'/60'/0'/0/0, the second on m/44'/60'/1'/0/0, and so on,.. so in other words using the account field of BIP44. (m/44'/60'/x'/0/0)

rationale

The benefit of this is that, as we increment an "hardened" path so it's more "secure" in term of privacy. We also use the same BIP44 convention for all cryptocurrencies so it unifies our approach and codebase.
The main change from your side is that, is as it's not a public derivation, you can't derive like you do, without the device, you will need to always ask the device to derive each address.

current actions and workaround

Since our release, we've seen some users a bit confused by this. To cover these issues, we have been scanning both the "legacy" paths and the new paths (1.0.0). Moreover, a second workaround was added (1.0.2): we will also always scan the first 5 addresses of MyCrypto even if there are "empty" accounts in the middle.. because, as we follow BIP44, when scanning accounts is to stop at first account without transactions. (the fact MEW allow users to take any arbitrary address from the pages have a cost. our tradeoff is so far to assume a user don't paginate more than the first page unless he have finished its account, which might still be not true,.. past first page, if users don't leave "empty" accounts and use the address in order, they should be fine)

Finally, we are also helping our users discovering their new Ledger Live path in MyCrypto but this is getting a bit more hairy to explain to them. Basically you can use the "Custom field" and manually input: m/44'/60'/0'/0 then select the first derived address (this is LedgerLive first account), then switch to m/44'/60'/1'/0, select the first address (this is LedgerLive second account), and so on..

But this is a temporary solution for now. I feel we should have a better option offered, right?

what you could do

here is suggestion of what you could have:

• a new "Ledger Live" option that would derive the addresses using the hardened path. Not sure how reachable for you to paginate address like before you will always need the device and it can take some times to derive addresses (like 1-2s per page)
  • if you do so, please also follow BIP44 spec part that says: Software should prevent a creation of an account if a previous account does not have a transaction history (meaning none of its addresses have been used before).
• the previous Ledger option might be renamed as Ledger (legacy)

[tayvano]

So there are a few different things going on here. It should be noted this is for the ETH network only.

1. When a user selects "Ledger" and is presented with the mnemonic modal, we should default to the new path (below in 4). It should be labeled Ledger (ETH).

2. We should make the old Ledger path available in the dropdown under Ledger - Legacy (ETH)

3. If a user connects via Ledger, we should encourage them to check the Ledger - Legacy (ETH) path if they don't see their balance. This messaging should be placed in the modal itself.

If you don't see your existing Ledger address(es), please try selecting "Ledger - Legacy (ETH)"

4. It's a bit more complex than just adding a new path and switching up the defaults though as the number that we iterate through on the path is changing as well, from m/44'/60'/0'/x to m/44'/60'/x'/0/0:

m/44'/60'/0'/0/0
m/44'/60'/1'/0/0
m/44'/60'/2'/0/0

So we will need to update how we derive for this specific path (but none of the others) as well.

[Arachnid]

@gre What possessed the Ledger team to pick an entirely new option, instead of one of the four or so existing ones used by other devices and wallets? The tower-of-babel around derivation paths was bad enough already!

Edit: Also, there's an open pair of EIP drafts (600 and 601) that define ethereum-specific derivation paths. Would you consider transitioning to them instead of another oddball Bitcoin-based path?

[gre]

@Arachnid

I think the main reasons was

• the derivation path is consistent across all other cryptocurrencies and is standard (following BIP44, so it's not something we invented).
• this offers more privacy because it's an hardened derivation
• (minor) only BIP44 seems to clearly state that you scan address in order, which does not seem the case for other choices? (MEW deliberately allow you to pick any address, not necessary "the next one")

is there any of the options that uses hardened derivation we were not aware?

[Arachnid]

the derivation path is consistent across all other cryptocurrencies and is standard (following BIP44, so it's not something we invented).

BIP44 doesn't really fit Ethereum very well. As a result, there's already several mutually incompatible interpretations of which component to increment. I'm sure the MEW folks could summarise existing options for you.

this offers more privacy because it's an hardened derivation

This is a nice benefit - but is it worth breaking compatibility with every other user of the scheme for it?

[SharonManrique]

Added to Asana

[cburgdorf]

We should make the old Ledger path available in the dropdown under Ledger - Legacy (ETH)

@tayvano I came here to open an issue about that but then found this one. Currently the derivation path that people used when they bought and set up a ledger a while back isn't listed anymore. This may confuse a lot of people who are trying to access there account with their seed phrase (which they shouldn't in the first place but still it happens)