What is Safe Wallet?
Safe Wallet, previously known as Gnosis Safe, is a decentralized custody protocol and collective asset management platform. Put simply, it is a smart contract wallet built in 2017 and is designed to manage digital assets on multiple EVM-compatible blockchains, such as Ethereum, Polygon, Arbitrum Optimism, etc.
Safe Wallet is another successful spin-off from the Gnosis ecosystem following Cowswap. The spin-off has enabled Safe Wallet to have an even stronger focus on its mission: increase adoption of smart-contract-based accounts. Soon after the spin-off proposal, Safe Wallet raised $100M in a funding round led by top-tier venture capital firm 1kx at a valuation of over $1B.
Source: https://safe.mirror.xyz/zMPp8uqZpxKgeXotSFv76bd2G8lJTmghH1FDWFm604c
To date, Safe Wallet has become the most well-known multi-signature wallet protocol and expanded its smart-contract-wallet-based ecosystem. Already today, the Safe ecosystem consists of over 45 teams building on top of Safe Wallet. These projects provide specialized solutions across savings (Streams, Linen Wallet), treasury management (Coinshift, Parcel), DAO tooling (Utopia Labs, Orca Protocol), NFTs (Prysm, Castle) and wallets (Rabby, Metamask Institutional).
In the meantime, Safe Wallet modularized the smart contract wallet toolkits for broader accessibility and usability. Safe{Core} is the flagship product from the Safe Wallet team. Safe{Core} is an open-source and modular account abstraction stack. It's the essential tooling and infrastructure for integrating the Safe Smart Account into any digital platform, ensuring a tested core with flexible and secure capabilities for innovative applications.
Features of Safe Wallet
So what makes Safe Wallet so indispensable in the crypto industry? The widespread adoption of Safe Wallet contributes to the key features of Safe Wallet, which will fit the market pain point of the crypto industry, including:
- Stealth Security with Multiple Signers: It provides top-notch security with multiple private keys (multi-sig) and rigorously audited contracts. To date, Safe Wallet has experienced 0 protocol breaches, making it one of the most reliable wallet protocols in the world.
- Self-Custody: Safe Wallet never owns any of the assets stored in user accounts. This means that users have the freedom to manage their private keys and make transactions without the need to trust a third party with their assets.
- Co-Management of Assets and flexibility: With multiple private keys, the same account can be jointly managed by many users enabling decentralized co-ownership for DAOs, groups, and enterprises. Meanwhile, it also allows the ability to add new signers, remove old signers, and replace account ownership.
- Built-In App Store: The best web3 apps are accessible right from inside the Safe Wallet interface. So far, over 45 certified DApps are available in the Safe app store and the DApp number is still growing.
- Transaction Simulation: It allows users to simulate transactions before sending them through. This intent-driven feature enables users to straightforwardly understand what happens after the transaction is finished.
- Multiple Blockchains And Clients Support: Safe Wallet is supported on 14 blockchains and is available on both desktop and mobile. It offers the convenience of multisig in the pocket, allowing users to track their assets and transactions easily.
As further efforts are directed towards the development of account abstraction and smart contract wallets, we can anticipate the introduction of more user-friendly features on Safe Wallet. These enhancements, including gasless payments and seamless fiat onramps, are set to position Safe Wallet as the premier gateway for widespread crypto adoption.
Safe Wallet Adoption
It is indisputable that Safe Wallet ranks among the most widely adopted DApps within the crypto industry. Spanning a range from protocol operations to identities, Safe Wallet is pioneering a multitude of use cases and reaping the benefits of its unique advantages within the industry. Let’s delve into a few prominent scenarios where Safe Wallet has been well adopted.
- Asset Management: Safe Wallet supports major crypto-native venture capitals and sophisticated market players to secure and manage their investments/treasury and market-making activities. Signers can easily activate millions worth of transactions with a few clicks even on their mobile devices.
- DAO and Protocol Operations: A great number of protocols use Safe Wallet as a core part of protocol operations, such as managing project code in a decentralized way. Major DAOs are also loyal users of Safe Wallet. With Safe Wallet, they can easily enforce on-chain governance and treasury management remotely and safely. For example, the ENS community is governed by ENS DAO and community members with the help of multiple Safe Wallets.
- Storage of Identities: Worldcoin is a digital identification platform that aims to provide each person with a convenient way to verify that they are a real human. Every Worldcoin account is a Safe Wallet account on the backend. Interestingly, the World App is the largest deployer of Safe wallets on the Optimism blockchain.
- Infrastructures of AI Modularity: Crypto AI projects can utilize Safe modules as an orchestration layer for complex actions. Autonolas is one of the earliest AI projects that integrate Safe Wallet for AI-powered smart execution. To date, 18% of all Safe transactions on Gnosischain originate from Autonolas AI agents.
Source: https://dune.com/adrian0x/service-safe-transacitons-on-gnosis-chain
As the reach of cryptocurrency extends into diverse domains, including Real World Assets (RWA) and Decentralized Physical Infrastructures (DePIN), the potential use cases for Safe Wallet are set to expand. This progression is poised to unlock the inherent power of Safe Wallet, reinforcing its role as a fundamental ownership layer in these emerging fields.
Onchain Metrics
The key metrics of Safe Wallet also reflect its fundamental role in crypto adoption. Till now, over $100B worth of assets, including blockchain native tokens, stablecoins, and ERC20 tokens, are in the custody of Safe Wallet across multiple blockchains. Meanwhile, a total of 8.5M Safe accounts have been created and have executed over 52M on-chain transactions so far.
Source: https://dune.com/safe/all
Ethereum, Optimism, and BNBchain are the most popular blockchains with the largest Safe TVL, while Safe TVL on emerging blockchains like Base, is catching up quickly. Interestingly, Optimism, Polygon, and Gnosischain are the top blockchains with the safest account transactions. Significantly, Worldcoin has played a pivotal role in promoting the adoption of Safe on both Optimism and Polygon networks. This is largely due to Worldcoin’s policy of assigning each user a Safe account upon successful verification. While this was initially implemented on Polygon, the same practice is now being followed on Optimism. Gnosischain is also a rising blockchain with growing Safe adoption, possibly due to the AI-integrated Safe execution experiments on this platform.
Source: https://dune.com/safe/all
$SAFE Token
As one of the most important infrastructures in the crypto industry, Safe Wallet launched its token: $Safe to further implement the decentralization of Safe products and community. The $Safe token was initially launched and locked in 2022. On April 23, 2024, Safe’s token contract was unpaused, enabling holders to transfer and trade their tokens.
The $Safe token has a fixed total supply of 1B with 427M tokens in circulation instantly after the unpause. As of now, the market cap of $Safe is approximately $790M with a 24-hour trading volume of $15M.
Source: https://coinmarketcap.com/currencies/safe1/
The $Safe token serves as a multi-purpose utility token, including:
- Governance: Be a part of Safe DAO and shape the next evolution of ownership on smart accounts
- Safe {Pass} Program: Earn points through activity, lock SAFE tokens to boost points, and be rewarded.
- Future Stakes: Take the stake in future utility initiatives driven by the Safe Community.
Potential Value Capture
At present, there is little revenue accrued to the $Safe token as Safe Wallet itself is free to use and charges no fee for swaps or integration. As a consequence, the lack of buying power unfortunately led to a token price drop of around 40% since its launch.
However, value capture of the $Safe token can be implemented through multiple methods in the future, as Safe Wallet is becoming dominant in treasury management and custody across major blockchains. The key point is to create revenues for Safe Wallet.
Swap Fees
Several methods are viable to create revenues for Safe Wallet. For example, as a smart contract wallet, Safe Wallet can charge an in-app swap fee as other wallet players like Metamask and Rainbow Wallet do. Currently, major wallets charge a 0.5% - 0.875% fee for a swap. In the prevailing market conditions, the weekly mainnet DEX trading volume facilitated by Safe Wallet fluctuates between $150M and $300M. If Safe Wallet were to adopt a fee tier (0.875%) similar to Metamask, this would translate to a weekly swap fee ranging from $1.3M to $2.6M. Consequently, this could potentially generate an annual income of $67M to $135M.
Source: https://dune.com/safe/ethereum-dex
Treasury Custody
Treasury custody is another method to create more revenue for Safe Wallet, given the fact that over $100B worth of assets are stored in Safe Wallet. Currently, Coinbase custody charges its users a setup fee of $100,000 and a 10 basis points management fee monthly. If 10% of Safe Wallet TVL is in Safe custody, there would be $10M monthly revenue at the same rate as Coinbase, even without a setup fee. As a result, the custody business would create around $120M in revenue yearly.
Blockchain Integration Fees
Blockchain integration also creates revenues for Safe Wallet. Although Safe Wallet is supported in multiple chains, there's a need for Safe Wallet integration for emerging blockchains, such as app-specific chains (appchain). Blockchain integration is a fledged business in crypto. For example, Tether/Circle charges fees for their stablecoin support on various blockchains. Though the expected payoff is unclear, blockchain integration is a feasible method to generate more revenue.
App Store Tax
At present, there are over 40 DApps in the Safe app store and more DApps are expected to be onboarded with the increasing adoption of Safe Wallet. An app store tax would be an option to collect more revenues just like what the Apple app store had successfully done in the Web2 world. In the meantime, customized services are also an option to create additional revenues for enterprise Safe Wallet users.
Source: https://app.safe.global/apps
In a nutshell, the value capture of the $Safe token is based on the revenue generation of Safe Wallet. Sustainable revenue creation of Safe Wallet is the key to unlocking the full utilities of the $Safe token and supporting its value it.
Closing Thoughts
The performance of the $Safe token has not quite met expectations following its listing on Coinbase and OKX. However, it is undeniable that Safe Wallet has emerged as a pivotal and widely embraced infrastructure within the crypto industry. At present, Safe Wallet is free to use. Looking ahead, a variety of revenue-generating alternatives are being considered to bolster the value capture of the $Safe token. The future holds promise, and let's wait and see the unfolding developments.
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