Safe (formerly Gnosis Safe) is a multi-sign wallet running on multiple networks, which requires a minimum number of users to approve a transaction before execution.
Businesses and individuals can use multi-sig wallets to manage assets safely, perform sensitive transactions, and achieve redundancy.
Suppose you and your friend build a metaverse project. You are the CEO, and your colleague, who doubles as a software engineer, is the one who wrote the smart contract. The project becomes popular, and your profits increase from your product offerings. You decide to lock your profits in a digital wallet, but your friend secretly drains all the funds and disappears.
You become frustrated as most activities are adversely affected, but you manage to walk out of the mess, having learned a life lesson. Henceforth, you decide that all sensitive company transactions require approval from the majority. For instance, withdrawing assets from the treasury accounts require a minimum of 60% approval from a known group of individuals. If the group consists of 15 people, you need at least nine permissions to execute a withdrawal transaction.
To seamlessly implement this setup, you need a system to manage your treasury funds and voting. Now, this is where Safe (formerly Gnosis Safe) comes in. Instead of building a system from scratch, you can use Gnosis Safe to manage your digital assets. This article delves into what Safe is, how it works, its unique features, roadmap, airdrop, and more.
What is Safe (formerly Gnosis Safe)?
Safe is a multi-sign wallet running on multiple networks, including Ethereum Mainnet, Ethereum Testnets, Arbitrum, Aurora, BNB Smart Chain, Gnosis Chain, Polygon, etc. Essentially, it requires a minimum number of users to approve a transaction before execution (M-of-N).
Most cryptocurrency users are only familiar with single key wallets, often known as externally owned accounts (EOAs). Such accounts include MetaMask, Exodus, Trust Wallet, etc. EOAs are protected by 12 or 24-word “seed phrases,” also known as private keys. If your private key is lost or stolen, you may lose total access to your funds.
As such, single key wallets are not ideal for crypto projects with multiple owners – if the employee trusted with the private key goes rogue or is careless, the funds may be lost forever. Even if a project has a single owner, it’s still ill-advised to manage your funds alone, as there is the possibility of being the single point of failure. The best solution is using a multi-sig wallet, like Safe.
For example, if your project has 15 core members, Safe allows you to create a wallet that requires 2/3 approval (10 members) before transactions are performed. This ensures no single member compromises the project funds by acting in their interests. Besides, Safe guarantees self-custody over your funds. It eliminates the risk of custodial service companies giving you a hassle in managing your project, as the deployed smart contract is trust-minimalized and is under your control.
One of the major pain points of the crypto industry is secure access and administration of assets – not just for decentralized autonomous organizations (DAOs) but for individuals as well. Safe has emerged as a secure and customizable solution for digital asset management. Several DAOs, digital businesses, and individuals, including Vitalik Buterin, one of the co-founders of Ethereum, are already using it.
How Does Safe Work?
Let’s briefly look at Ethereum accounts or wallets to understand how Safe works appropriately. Generally, Ethereum has two primary types of accounts: EOAs and contract accounts. EOAs are the standard web3 wallets, like MetaMask, characterized by public-private key pairing. These wallets allow users to access and manage their digital assets, which live on blockchain networks. For example, you can transfer BTC to another address or deploy a smart contract to mint a non-fungible token (NFT) through your MetaMask wallet.
On the other hand, contract accounts or smart contracts lack private keys. Instead, they have lines of code that implement predefined instructions once they are met. One of the best ways of leveraging contract accounts is creating multi-sig wallets with several keys. A standard multi-sig wallet consists of three owners (each with their own key), requiring at least two approvals to make transactions.
These wallets are flexible, and businesses and individuals can use them to:
Manage funds safely – the majority give their consent to move funds around; hence, no single individual can run away with funds.
Perform sensitive transactions – serious business deals are authenticated by the majority.
Achieve redundancy – You can still access the wallet via the remaining keys if you lose one key.
Safe is an example of a smart contract that uses multi-sig. It functions as a deployed smart contract with a public address. Transaction signing is done via a customized logic tailored for specific use. This requires several keys to perform transactions, and you can approve transactions through hardware wallets, EOAs, or the Safe mobile app. Besides, Safe connects with other apps via direct integrations, making it easy to use.
What are the Unique Features of Safe?
The main features of Safe include:
Multi-signature: You can entirely modify how you manage your funds, with the functionality of specifying a pre-defined number of signatures to approve transactions. The feature prevents unauthorized or minority control of assets.
Supports a wide range of assets: Currently, Safe supports a broad basket of assets, including ETH, ERC20 (tokens), and ERC721 (collectibles). Safe also provides the USD conversion rate of user assets.
Integrates with many wallets: You can sign a transaction using hardware, software, or a paper wallet.
Secure apps: Safe brings multi-sig security to DeFi, enabling users to put their assets to work directly from its interface.
The table below shows how Safe features compare with other crypto storage solutions:
Adapted from https://gnosis-safe.io/
How to Use Safe
Below are five steps on how to set up a Safe wallet:
Step 1: Create a Safe
A Safe takes approximately 60 seconds to create. Visit the web app here.
Step 2: Connect a Signer Wallet
To create a Safe, you must link a signer wallet, like MetaMask, Coinbase, Trust Wallet, Ledger, Trezor, etc. Based on the blockchain, ensure you hold some native tokens like ETH if you use the Ethereum network since the Safe deployment costs some transaction fees.
After connecting a wallet, you can start creating your Safe by clicking “Create New Safe” and naming it.
Step 3: Choose Signers
Signers are the wallets permitted to submit and validate transactions (you can change them later as you wish). Remember, the wallet you connected in step 2 is regarded as the first signer, but you can also change it.
Include as many signers as you want by pasting addresses or typing ENS names.
Step 4: Define Confirmation Threshold
Specify the number of signer confirmations a transaction requires to be executed. If you are an individual, ensure you have access to adequate signers to attain the limit. Else, you won’t be able to access your funds.
Step 5: Review and Deploy
Review your parameters before clicking the “Create” button.
How Much Does It Cost to Create a Safe?
The total transaction fee you need to create a Safe depends on several parameters like gas price, number of signers, usage of the ProxyFactory, and extra logic set (FallbackHandler).
A Safe with two signers requires approximately 0.00263 ETH ($3.55).
A Safe with three signers requires about 0.00309 ETH ($4.17).
A Safe with four signers requires about 0.00331 ETH ($4.46).
Safe has started an airdrop of its native token, SAFE, to nearly 43,000 eligible users. The airdrop is part of the establishment of SafeDAO, the organization that was created after Gnosis Safe rebranded to Safe. Qualified users have up to noon CET on December 27, 2022, to claim their tokens on the Safe mobile or web app.
SAFE token holders enjoy voting rights on SafeDAO. Besides, they can delegate their voting rights to guardians with common governance interests. “We are excited to finally hand over the ownership of Safe to the community through the SAFE token and SafeDAO,” said Safe co-founder Lukas Schor, adding, “As a public good and fundamental infrastructure for web3, we know that only decentralized governance can guarantee the long-term neutrality of the project.”
SafeDAO conducted a community challenge to eliminate Sybil airdrop hunters – users who join projects exclusively to claim upcoming airdrops. They create several wallets that execute a single transaction on a potential project, thus, qualifying for future airdrops. Sybil airdrop hunters often dump their tokens immediately upon claiming them, putting more selling pressure on the tokens. SafeDAO claims it eliminated almost 12,000 wallets related to Sybil airdrop hunters, saving nearly 2.9M SAFE tokens.
Thank you to everyone who helped ensure a fair $SAFE distribution!— Safe | Gnosis Safe (@safe) September 27, 2022
• Over 500 submissions 🤯
• 12,168 Safe addresses removed, leaving 43,575 eligible.
• 2.9M $SAFE saved, redistributing 75% to the community and 25% as a reward 💸
Full post👇https://t.co/hU60d8qmir https://t.co/pBwb34Jn8o
Upon launch, the SAFE token will serve as the native currency for Safe.
Here is an overview of the SAFE token allocation:
5% Allocation to Users
Active Safe users should be the main stakeholders of the SafeDAO governance relative to their previous activity. In this regard, 25M tokens (2.5% of the total supply) are currently available for claiming. The remaining 25M will be spread across four years.
5% Allocation to Ecosystem (Guardians)
Apart from users, Safe considers external ecosystem contributors as core stakeholders. The category consists of individuals actively contributing to the Safe open source elements and teams creating solutions on Safe. Currently, 12.5M tokens are available for airdrop claims, while the remaining 12.5M will be spread across four years.
5% Allocation to Joint Treasury
The 5% joint treasury allocation is already available and is governed by 2-out-of-2 multi-sig between GnosisDAO and SafeDAO.
7% Allocation to Safe Foundation
The Safe Foundation ensures the wellbeing of the Safe Ecosystem – it dedicates its resources to ecosystem rewards and growth, which requires a legal body to act as a counterparty. The tokens are vested across four years, with 20M tokens available now.
8% Allocation to Strategic Raise (Backers)
Safe carried out a strategic funding round in July 2022 to align the core strategic partners and industry specialists. 80M tokens were vested to Safe backers over four years with an initial lockup period of 12 months.
15% Allocation to Core Contributors
Safe aims to incentivize its main contributors and align them with its long-term vision. Currently, 100M tokens (10% of the total supply) are assigned to over 40 main contributors, while the remaining 50M (5% of the total supply) is kept back for future core contributors.
15% Allocation to GnosisDAO Treasury
Gnosis is the founder and funder of Safe, and it will remain an integral element and partner. That is why GnosisDAO has been allocated a substantial number of SAFE tokens. The tokens are spread across four years, but 10M are available currently.
40% Allocation to SafeDAO
SafeDAO treasury funds are meant to facilitate further SAFE distributions. The allocation is spread across eight years, and 50M are available currently.
SAFE Supply Schedule
SAFE is expected to be fully vested by 2030, with a maximum supply of 1 billion.
Secure access to cryptocurrencies is necessary for the long-term growth and use of blockchain technology and distributed ledgers. Gnosis (the team behind Safe) has been building crypto-based asset management solutions since 2017, gaining a reputation in the space for engineering and security expertise. With this background, there is the potential that the team will solidify Safe as a requisite element of web3.
Josiah is a tech evangelist passionate about helping the world understand Blockchain, Crypto, NFT, DeFi, Tokenization, Fintech, and Web3 concepts. His hobbies are listening to music and playing football. Follow the author on Twitter @TechWriting001