Our Investment in Squads
For teams building on Solana, Squads needs no introduction. Since its founding in 2021, the company has established itself as the dominant smart wallet technology provider to the Solana ecosystem, currently securing over $12bn in assets. Over 40k user smart accounts have been created on its platform, and it counts over 250 projects as paying customers.
As venture investors, it’s our job to write checks into companies we believe are pursuing large or growing markets, with competency and differentiation at their sails. It’s about the people, so when those companies are led by founders with unique tenacity and a sense of mission, we get excited. When they develop products that we already use and love, it is particularly gratifying. In Squads, we’ve got it all.
As the founders, Stepan, Deni, and Sean, tell it, they set out to build asset management tooling for DAOs, which they believed would be the only form of onchain organisation. Then, they saw a path for traditionally structured companies to use blockchains for expedited, cheaper operations as well. Their current mission was born: to serve teams building businesses onchain, by making transacting and managing digital assets secure and easy.
Initially, Squads’ smart account technology was used by Solana teams to manage program upgrades. Today, it primarily supports projects to manage treasury assets (funds, grants, revenues) and operational functions more broadly.
The team has shown an ability — often tricky in the digital assets arena — to deftly balance security and user-friendly product objectives. Its ‘multisig’ infrastructure, that requires multiple parties to sign and approve transactions before execution, provides superior security and customization than traditional wallets. For treasuries, it is arguably more secure than cold storage solutions, where a 1/1 signer can be attacked.
Squads’ new “Fuse” mobile smart account wallet strikes the best of both in the security and programmability balancing act. It provides multisig security, but keeps the product accessible; with 2FA (email, hot/cold wallet, or FaceID), users get enterprise-level security, without the seed phrase recovery process that has often bungled retail users. Rather, if they lose access to one of the keys, they can recover the wallet via email or another cold wallet. We believe this makes sense; users want to responsibly secure their digital assets, but without Fort Knox-or-bust terms imposed on them.
A Winning Crypto SaaS Product
Other recently developed features show Squads’ keen focus on user needs. As an example, Solana transactions are asynchronous, meaning transaction creation, approval, and execution are distinct steps, and Squads creates onchain accounts for each to support a transaction. Solana charges a rent for each, making a Squads transaction pricier than alternatives. The accounts are not needed once the transaction is finalized, so Squads developed its “Rent Reclaim” feature, which lets users close the excess accounts and recoup rent charges.
The team views sophisticated SaaS as its product bar, not that clunky tinkering we have sometimes resigned ourselves to as crypto users. A sleek interface lets users track transactions in real-time; if errors arise, attribution is helpfully provided. With the introduction of spending limits, users can specify situations — say for smaller transfers on the quick or for payments to a specific address — where multisig approval requirements are disabled. They can also set ‘max’ withdrawal amounts; if the wallet were hacked, the theft is capped.
Our Thinking
At RockawayX, we do a fair amount of wallet user role-play. We’ve got long-term digital asset holdings, where security is our paramount concern. We work closely with projects that have evolving programmatic needs, as they coordinate and compensate growing communities of developers and contributors nimbly. And, as an active liquidity provider across DeFi, we presently serve the “solver” role, where we evaluate, approve, and fund bids to Wormhole’s cross-chain fast-transfer product. To perform this function effectively, we must execute transactions quickly, programmatically, and with high security. This work has inspired some wallet ‘soul searching’ and makes it a particularly exciting moment for us to partner closely with Squads.
While the jury may be out on crypto wallets being 100% secure, we know a startup’s fate is never sealed. But, in Squads, we see a company with ideal positioning and excellent odds; the team has executed strongly and its products already secure a majority of Solana-native enterprise assets. As Solana bulls, we see that home turf growing. Partnerships, including with other projects in our network, like yield platforms, Kamino or Exponent, could unlock new user activities and fee opportunities. And then, there is the space beyond. It is easy to imagine Squads expanding its offering to support projects moving assets (and those of their devs and users) across crypto ecosystems. As venture investors in and happy users of Safe, the dominant Ethereum smart wallet, we are hopeful there may be partnership opportunities to unlock streamlined workflows.
We are excited to back Squads in its Series A fundraise and its mission to grow the onchain economy.
Want to learn more about Squads? Get more information on their smart wallet products at https://squads.so and how users are getting the most out of them on Squads’ YouTube channel. Follow them on Twitter @SquadsProtocol.
