1kx talks about Safe: Opening the era of programmable ownership

Author: 1kx, Translation: Golden Finance xiaozou

Since the establishment of the 1kx Fund in 2018, we have invested in more than 100 projects, and our investment decisions are based on the view that token networks driven by software and managed by the community have great potential to impact the entire world economy and society. We believe that the technology to achieve this goal is based on the following three main principles:

· Self-custody. Users should fully own and control their own digital assets and be able to use them in a safe and convenient way. (The first digital property rights unlocked in history)

· Open innovation. Technical primitives should be permissionless and composable to build a resilient ecosystem of independent products and services.

· Community ownership. Builders, contributors, and users should own and control the protocols and infrastructure that power our daily lives. This will align incentives for network participants in the long term, with tokens serving as a mechanism for the protocol to capture the value it creates and distribute that value to stakeholders and activities that contribute to its success.

Over the past five years, Safe has laid a solid foundation for the three pillars of the Web3 ecosystem. First, it provided a self-custodial smart account that enables on-chain organizations to securely store and manage their funds. Then, it opened up its core infrastructure to allow independent teams to build on it in a modular, permissionless manner. Third, it launched the SafeDAO and SAFE tokens, which are designed to help the project decentralize the technology, economics, and governance of key components in the SAFE ecosystem.

Why did we invest in Safe?

Safe was born out of the classic startup motto, “build what you want,” when the Gnosis team developed an internal multi-signature smart contract wallet, “Gnosis Safe,” to store team funds. The wallet was quickly adopted by other DAOs and communities looking for a simple way to manage on-chain assets. Safe was one of the first to find product-market fit in the growing suite of DAO tools at the time.

By the time we led the Safe investment in 2022, it had become the de facto asset management solution for many DAOs, enterprises, and advanced users. Safe stored over $40 billion in value at the time, and an emerging ecosystem of products including wallets (Metamask Institutional), vault management (Coinshift, Parcel), DAO tools (Onchainden), NFT portfolio management (Castle) were all built on top of Safe's core smart account.

As long-term users, we already see Safe as critical infrastructure in the space, but we are even more excited about what is coming. Safe's value proposition goes far beyond a standalone multi-signature wallet. It is designed to be a fully secure programmable ownership platform. Over the past two years, we have been working with the Safe team to build on this vision and continue to make progress with Safe{Wallet} and Safe{Core}.

Enabling Programmable Ownership

Safe{Wallet} is the flagship self-custodial wallet based on the Safe{Core} smart account contract and is now one of the most Lindy products in web3 due to its unparalleled security performance, technical rigor and community management.

Safe has seen increasing adoption through market cycles, further fueled by the failure of centralized service providers that have been found to have reckless behavior with user funds. In the week following the FTX incident, Safe saw over $800 million in net inflows as users turned to self-custodial solutions, further demonstrating market confidence in the product and expanding the user base of the Safe ecosystem of products and services.

Today, Safe’s key performance is as follows:

· Total value on 15 networks exceeds $100 billion

· Monthly transfer volume of ETH alone exceeds $1 billion

· 8 million Safe accounts have been created (a year-on-year increase of 290%)

· 42 million Safe transactions have been completed (a year-on-year increase of 350%)

Safe is now used to support payments through traditional payment channels (through debit card products such as Gnosis Pay and BasedApp). For the first time ever, consumers can use their own Safe assets to purchase goods from any merchant that accepts Visa payments. Safe{Core} smart accounts also power Worldcoin's self-custodial ownership technology stack, with millions of unique addresses worldwide.

With battle-tested smart contracts at its core, Safe{Wallet} can be combined with other protocols and applications. Its app store currently has more than 100 applications covering areas such as DeFi, NFTs, bridging and governance, and users can interact directly from the wallet interface. More importantly, Safe's architecture facilitates functional expansion through third-party modules. This allows users to choose the service providers they want to work with and transform Safe into a platform for downstream products and services.

Take the Recovery module as an example. After installation, users can immediately specify a recoverer and customize recovery conditions. Safe's recently launched Recovery Hub uses the module to provide a carefully curated market of cryptocurrency recovery options (starting with Sygnum and Coincover options), catering to the different preferences of individuals, DAOs and institutions for recovery solutions and providers.

Other examples of modules include session keys, account automation, and spending limits. So far, the Zodiac team is responsible for the most prolific security modules. But in the past year, we have seen the emergence of dedicated module infrastructure projects such as Rhinestone and ZenGuard, which have accelerated the development of modules through developer tools and module registries, making smart accounts more powerful than ever.

Making Web3 Accessible to Everyone

As the first and leading Smart Account provider, Safe has been at the forefront of account abstraction, which aims to make Smart Accounts the default way to interact with web3. 2023 is a critical year for the wallet ecosystem, with the mainnet deployment of the ERC-4337 EntryPoint contract and the surge in embedded wallets, enabling users to log in to dapps using a familiar login flow.

For developers and builders, Safe{Core} is an important tool for integrating Safe Smart Accounts into any platform. Safe{Core} has an account abstraction SDK that is designed to be agnostic to the paymaster service of gas abstraction, identity provider, and transaction relay infrastructure, making Safe accounts compatible with almost any development tool stack. The Safe{Core} SDK continues to lead the market share, and developers hope to enhance their dapp usability with account abstraction capabilities.

Safe’s commitment to the highest security standards and its unparalleled consistent performance enable developers to launch production-ready apps where users can interact with Safe accounts as they have stood the test of time. Account abstraction is just the first step in unlocking the full potential of web3. Safe’s plug-and-play use-case-agnostic primitives, proven infrastructure, and vibrant community of builders position it to achieve even more ambitious goals in the coming years.

As long-time users and members of the Safe ecosystem, we look forward to seeing the proliferation of Safe primitives across new user groups, networks, and markets as Smart Accounts become the primary way to interact with web3.