Safe: Web3’s App Store
We are thrilled to share details about our conviction in Safe, why we believe it will become a core network primitive of web3, and our decision to actively build, contribute, and participate in this ecosystem.
Key Takeaways
- Safe, a Gnosis spinout, is an easy-to-use multi-signature smart contract wallet that provides a powerful primitive to custody funds.
- As a result of its technical proficiency, practical simplicity, and robust security, Safe has de-facto become one of the most popular Dapps in the EVM ecosystem.
- By replacing wallet signers with smart contracts, Safe’s module architecture enables a new paradigm of composability, setting the foundation of an exponentially growing ecosystem of builders and startups.
- As an application-neutral infrastructure, Safe is uniquely positioned to facilitate any use case, no matter what will bring the next wave of users.
- Collider’s core thesis focuses on backing future ecosystems and contributing as community members with support, incubation, and investment. Our conviction is rooted in Safe’s network effects potential, Safe’s team, and Safe’s highly versatile composability and security primitive.
Introduction
At the heart of the web3 ethos is the notion that ownership of the protocols, applications, and money that drive our everyday lives should be in the hands of society at large rather than in the hands of centralized institutions and corporations.
At Collider, we believe decentralization will not only drive the development of next-generation applications and user experiences but also do so in a much more scalable and equitable way. However, this collective ownership needs structure and security supplied by a robust infrastructure — primitives that the Safe protocol was built to provide.
As community members and builders, Collider is thrilled to partner with the Safe team as they build the fundamental infrastructure web3 needs to continue expanding.
A bit of background
Web3 ideals created a novel way of building decentralized systems. At the center of this innovation are DAOs (decentralized autonomous organization), which became the leading organizational structure (and buzzword) to manage and create decentralized systems.
Numerous startups, focused on creating, deploying, and managing DAOs have emerged, but none attained meaningful traction. We believe there is a straightforward reason for this — complexity. Most of these startups relied on complex interactions, modules, add-ons, and customizations, but failed to satisfy the most fundamental requirement of a DAO — reliable, secure, and simple custody of funds.
It is here where Safe, a recent spinout from Gnosis, found its product market fit. By perfectly combining composability, effortless deployment, and ease of use, with a highly reliable and secure way to custody funds, Safe is quickly becoming one of the most adopted Dapps on Ethereum. This structure lays the foundation for what we believe will be an ecosystem of startups, DAO templates, modules, applications, add-ons, and much more.
What is Safe?
A flexible Smart Contract Wallet
Safe first launched its Multi-sig (multi-signature) wallet, which uses a simple yet effective multiple signature structure as a primitive to manage crypto assets. The wallet permits users to set a predefined number of signatures to confirm transactions (m of n), practically removing the single point of failure issue that plagues other wallets and asset management applications.
Unparalleled Lindy Effect
Safe has de-facto become the most trusted application to store digital assets. A feat achieved through technical proficiency and continuous product delivery, the brand and reputation of Gnosis Safe, and an unparalleled security track record. The result is the most established Lindy effect in web3, which we calculate as total value locked (TVL) multiplied by the time it has been locked in (TVL * time).
The Holy Grail of Composability
By replacing a signer with a smart contract, one can create applications, modules, and protocols, while still using the underlying Safe smart contracts. These modules make Safe more than just a product; they make it a versatile middleware layer for building applications. Combining this with the extensibility of WalletConnect, Safe offers multi-layer interoperability with most web3 access points.
The (Bullish) Case for the App store
Since the announcement of the Safe spinout, Collider has seen a surge of teams interested in building on top, below, and around the Safe’s infrastructure. The trend is expected to continue and as more applications are built on Safe, its network effect will become stronger, making it easier to create more applications. We believe Safe’s core value proposition lies in its ability to achieve hyper growth by empowering communities of builders, contributors, applications, users, modules, extensions, and more, all powered by secure and reliable open-source software — web3’s vision in action.
Positioning
Safe is a use case-neutral infrastructure, which has already captured the DAO space with ~99% market share, and is becoming a core primitive across:
- Different asset classes (NFTs, ERC-20, Identity, data)
- Use cases (DeFi, P2E, communications, social),
- Various user groups (Custodians, Retail, DAOs, …)
Safe is uniquely positioned to grow and facilitate any use case in web3, regardless of what trends will carry the next wave of users.
- Lukas Schor, Co-Founder, Safe
In seeing these trends, it is safe to say (no pun intended) that Safe has carved out a new pie that will grow in tandem with the ecosystem.
Modules
Modules add functionalities to Safe. They are smart contracts that implement Safe’s functionality while separating module logic from Safe’s core contract. Modules allow the creation of admin keys, spending limits, recurring transactions, account automation, hierarchical access, direct execution of external decisions, and more. The most prolific set of modules is built by the Zodiac team.
What can be done with Safe modules?
Below are a few examples
- NFT lending frameworks using a Safe module.
NFT lending smart contracts can be created, where a borrower is added as a less permissioned signer and receives access to assets and their utility, without the assets ever needing to leave the wallet. This will enable NFT creators and owners, for example, to monetize and obtain more value from their NFT securely and reliably. (NFTfi, Pwn.xyz) - DAO voting modules.
Through the use of Safe as the core primitive, DAOs could build elaborate voting modules to improve their governance systems by increasing accountability, synchronization, and alignment. A few examples include Holographic Consensus, delegation, an interconnected web of Safes with permissions and hierarchies, and many more ideas we have not thought about yet. Palemera is a startup working in this space. - Account Abstraction
The complexity of current ‘wallets’ significantly blocks adoption in web3. Several factors contribute to this problem, including counterintuitive user interfaces, seed phrase-based security, irrecoverability, and the possibility of losing access. On Safe, seedless wallets with dead man switches, numerous recovery options, and even gas fee subscription models (where an organization aggregates and sponsors gas payments for subscribers) are all possible. These improvements can potentially facilitate greater adoption in web3 (EIP4337) - On-chain Automations
Another significant issue in web3 is the secure and reliable automation of on-chain actions. Even though there are several options and ‘torques’ available, Safe coupled with execution incentive mechanisms and integration to alerting systems could facilitate a trusted, predefined, and even dynamic automation of on-chain procedures. - Non-custodial banking-like services
Safe allows for the development of non-custodial/decentralized banking services, with support from a limited permissioned module that can execute predefined, templated actions while charging fees for such activities.
Why did we invest in Safe?
A core tenet of Collider Ventures’ investment thesis revolves around backing and participating in projects that will become platforms. We believe that Safe can emerge as one of the largest ecosystems in web3, becoming its version of “The App store”. We plan on becoming an integral part of the Safe ecosystem and together with Collider Labs incubate, invest, and support the next wave of startups who will build on top of Safe.
Further, our conviction is based on
- The Safe team. Developing blockchain-based financial infrastructure products since 2016, it has earned a reputation for expertise in engineering, execution, and top-tier product shipping.
- Our personal experience as users of Safe and builders in web3. As active web3 community members, we experienced firsthand the need for robust and intuitive underlying infrastructure, especially around safeguarding assets. Without it, web3 would struggle to mature, which makes Safe such an important project for the development of the space as a whole.
- Safe’s composability paired with inherently secure infrastructure. We believe Safe’s infrastructure will attract countless users and developers, fostering a rich community and becoming an ecosystem where innovation is facilitated and accelerated.
The economic, token, and value capture analysis will have to wait for after the merge. :)
At Collider we see ourselves first and foremost as community members and builders, our mission is to contribute and help this community thrive by supporting entrepreneurs as they build products and create value in the general web3 ecosystem.
Let’s build together
If you are building on Safe, please reach out at Eylon@collider.vc, DM me on Twitter, or find me at Berlin Blockchain Week. We at Collider are more than happy to help, ideate, connect, and hopefully also take an active role in your journey.
Big thanks to those who helped in writing, giving feedback, and sharing insights, Liz and Jess from Kitchain, Lukas and Jorge from Safe, Stefan from Gnosis, and of course, the entire Collider team.
