How to Securely Manage Company Crypto Funds with Gnosis Safe Multisig
As the popularity of Ethereum continues to grow, the user experience of wallets and DeFi (decentralized finance) is starting to outpace that of traditional means. If you’re running a crypto focused business, it’s likely that using traditional methods to manage company funds is a headache with a lot of friction and overhead. The Gnosis Safe Multisig provides a safe and user friendly experience to manage your company’s funds and transactions.
What is a Multisig Wallet?
Before diving into the how, it’s important to talk about the what. Most users of Ethereum are used to a single key wallet, often referred to as an externally owned account (EOA). These accounts are secured with a private key, which can be transformed into a 12 word “seed phrase” for the user. If that private key is compromised in any way, the funds can be stolen.
If your business comprises of more than 1 person, an externally owned accounts is not a secure way to manage your crypto business’s funds. If an employee goes rogue or is careless with the private key, the funds are gone forever. Even if your business is made up of just yourself, I’d argue it’s still a poor way to manage funds. So, what is the better solution?
Enter the multisig. The Gnosis Safe Multisig is a smart contract wallet running on Ethereum that requires a minimum number of people to approve a transaction before it can occur (M-of-N). If for example you have 3 main stakeholders in your business, you are able to set up the wallet to require approval from all 3 people before the transaction is sent. This assures that no single person could compromise the funds.
On top of that, the Gnosis Safe multisig gives you complete self custody over your funds. There is no risk of a bank giving you a hassle for running a crypto business and the smart contract that is deployed is completely trustless and in your control.
Setting Up a Gnosis Safe Multisig
While setting this up may sound more complex than having a single-key wallet, the reality is it’s extremely simple. In fact, it takes just 60 seconds to set up. Here is a walkthrough to get started:
Gnosis Safe Multisig supports web3connect which allows you to pick from a wide range of wallets.
Once a wallet is selected, you can start the process of setting up your Safe. This step is important as these are the addresses that have permission to submit and approve transactions (you can later remove or replace these addresses). The site will guide you through this process by asking for the account address or ENS name of the people who need access.
The last step is selecting how many confirmations a transaction requires before it is approved. Earlier in the article I talked about a 3 of 3 setup but there are many different setups that you can use and each have their own benefits or drawbacks. A drawback of a 3 of 3 setup is if one owner loses access to their account, the company funds are now stuck. Given that, I’d suggest that a 2 of 3 setup is in fact safer than a 3 of 3.
You could even consider a 5 of 6 where each person has 2 wallets (a hardware and an EOA) tied to the multisig. That way, in case 1 is lost, at least they still have access to the other.
This setting is something that should be discussed thoroughly within your company.
Once this is determined, submit the transaction and your Safe will be deployed onto Ethereum. This means that a contract has been created where the users specified are the owners and an address for the Safe has been generated.
Using and Managing a Gnosis Safe Multisig
Now that your Safe has been deployed onto Ethereum, you are able to send crypto in to it using the address generated. From there, you are able to start using it to manage your company’s funds. This includes sending and receiving funds, adding ERC20 tokens, monitoring transactions, setting up an address book and much more.
(Spoiler alert: very soon we will be adding DeFi integrations so that you can earn interest, trade tokens and much more straight from the interface)
The Safe also gives the ability to manage owners and configure confirmation requirements after setup. Say an employee leaves or you want to change the security setup and therefore the required confirmations, that is all possible via the settings pane.
Congratulations, you just set up a company bank account on Ethereum in a matter of minutes, something that would take days of paperwork and accumulate fees in the traditional financial world.
