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OCT 14, 2023

Safe Wallets (prev. Gnosis Safe): Fortifying Crypto Security with Multi-Signature Protection

by Crypto Alpha

This article delves into Safe Wallets, focusing on their Ethereum Layer 1 functionality and cross-blockchain utility. We cover their history, tokenomics, features, creation, and usage while discussing the pros and cons. By the end, you'll grasp how Safe Wallets revolutionizes crypto security, shielding your digital assets from ever-present threats.

Introduction

In the fast-evolving world of cryptocurrency, the importance of safeguarding your digital assets cannot be overstated. Over the years, we have witnessed numerous instances of massive financial losses stemming from private key leaks, fraudulent activities, insider trading, investment mismanagement, and unfortunate human errors. These incidents have left a trail of devastation, eroding trust and confidence in the digital financial landscape.
To address these vulnerabilities and provide a robust solution, the concept of a Safe Wallet has emerged. Unlike the conventional private key wallet, the Safe Wallet employs a sophisticated smart contract system, fortified by the power of multi-signature authentication. This revolutionary approach significantly enhances the security and reliability of cryptocurrency storage and transactions.
Within the crypto ecosystem are two primary categories of non-custodial wallets: Externally-Owned Accounts (EOAs), exemplified by popular platforms like MetaMask, Trust Wallet, etc, and Contract Accounts, epitomized by the Safe Wallet. EOAs are simple, single-signature wallets that rely on a private key for access, making them susceptible to various risks. In contrast, Contract Accounts, particularly the Safe Wallet, employ the formidable protection of multiple signatures and contract addresses, creating a formidable shield against potential threats.
In this comprehensive article, we delve into the world of Safe Wallets (previously known as Gnosis Safe), with a particular focus on how they operate within the Ethereum Layer 1 and their applicability across various decentralized blockchains. We'll explore the history, tokenomics, features, creation, and usage of Safe Wallets, while also considering their advantages and disadvantages. By the end of this journey, you'll gain a deeper understanding of how Safe Wallets are transforming the security landscape in the crypto realm, ensuring that your digital assets are shielded from the ever-present dangers that loom in the world of cryptocurrencies.

WHAT IS SAFE WALLET?

Image: CoinGecko
Image: CoinGecko
Safe Wallet is a trusted platform to manage digital assets on Ethereum and multiple EVMs. It is a smart contract wallet running on several blockchains that require a minimum number of people to approve a transaction before it can occur (M-of-N), which means it will require multiple signatures to approve a transaction. This allows an individual to add more security to their personal funds on the blockchain, similar to how 2FA (two-factor authentication) requires two separate forms of identification to access your CEX or E-mail, multisig wallets also eliminate the risk of a single point of failure.

BRIEF HISTORY OF SAFE WALLET

Gnosis was founded by Martin Köppelmann and Stephan George in the year 2015, during the then-recent launch of the Ethereum network, even though they did not partake in the Ether token launch. These two have been in the blockchain since 2013 during the time when Bitcoin was the only digital asset and was trading for only about $30. They learned about the Bitcoin Whitepaper and with time, started writing software and prediction market exchange for Bitcoin.
Image: safe.global
Image: safe.global
Then towards the end of 2014, they met Joseph Lubin, the founder of Consensys, who also encouraged them to join Consensys and build their new project on it, and that was how Gnosis Safe started. Safe spun out with a mission to build a better standard for ownership with smart contract accounts showcasing what they have been working on in 2018. Safe has grown to support fourteen (14) EVM chains (as of the time of writing). They Raised $100M+ across 60+ Contributors including funding from Matter Labs, Coinbase, DCG, 1kz, and many more. Safe is now managed by a Swiss-registered non-profit organization. These changes were implemented after a vote by Gnosis supporters to branch away on its own from the legacy Gnosis project. Thus, what was formerly the Gnosis Safe wallet is now known simply as Safe.

FEATURES OF SAFE WALLET

Image: safe.global
Image: safe.global
Safe Wallet has so many incredible features one of its best is top-notch security of multiple private keys (multi-signature). With multiple private keys, the same account can be jointly managed by many users enabling decentralized co-ownership for DAOs, groups, and enterprises using Gnosis Safe’s UI to view transaction history, approvals, and status. Safe Wallet has successfully integrated various features some of which are:
1.      Multi-Signature
2.      Safe App Permission
3.      Spending Limits
4.      Batch Transactions
5.      Smart Contract Audity
6.      Holding ERC-721 & ERC-20 tokens
TOKENOMICS AND AIRDROP
Image: safe.global
Image: safe.global
Safe has over $40B secured for individuals, DAOs, investors, core teams, and more. Safe launched an airdrop of its native SAFE Tokens to over 43,000 users as part of the transition to SafeDAO. These tokens grant voting rights in SafeDAO’s decisions. An anti-sybil mechanism was used to save almost 2.9M tokens from potentially fraudulent claims.
More information about the airdrop: Twitter (X) Announcement, Safe Global Distribution.

HOW TO CREATE AND USE SAFE WALLET

Safe is created with these easy steps, firstly make sure you have an EVM address on Metamask, Trust Wallet, or any other supported wallet. In the article, we will be using Metamask wallet.
2. Click on launch app:
Image: safe.global
Image: safe.global
3. Create Wallet (using any supported chain): P.S: The writer is using zksync Era Manniet
Image: safe.global/wallet
Image: safe.global/wallet
4. Connect Safe Wallet to Metamask, Sign-in, and Create a new Safe Wallet.
Image: safe.global/wallet
Image: safe.global/wallet
5. Set a name and switch to zkSync or any supported chain you would like to use then, click on next.
Image: safe.global/wallet
Image: safe.global/wallet
6. To add a new owner, click on add new owner, then click on next.
Image: safe.global/wallet
Image: safe.global/wallet
7. Set a name for the added wallet (new owner) and add an address (create a new wallet on Metamask or add an existing wallet).
Image: safe.global/wallet
Image: safe.global/wallet
8. Add your name and a Metamask address (existing account or create a new one) and confirm the transaction with your connected Metamask Wallet (a little gas fee would be deducted). After that, you can start using Safe(Wallet).
Image: safe.global/wallet
Image: safe.global/wallet
9. Go to Homepage and head over to settings.
Image: safe.global/wallet
Image: safe.global/wallet
10. Change the number of Signers to two signers
Image: safe.global/wallet
Image: safe.global/wallet
11. Finally, click on NEXT and confirm the transaction. Your SAFE WALLET HAS BEEN SUCCESSFULLY CREATED!

More Tutorials

Learn how to successfully use Safe Wallet.Gnosis Safe Tutorial - How To Use MultiSig Wallet In DEFI - by JohnnyTime (Youtube).
PS: At the current time of writing, zksync farming is ongoing. Using Safe Wallet as a farming tool for the retro drop can serve as a Multiplier for zkysnc Airdrop.

ADVANTAGES OF SAFE WALLET

As one of the most critical pieces of infrastructure in the Web3 ecosystem, the integration of Safe{Wallet} and Safe{Core} will be a game changer for the developer experience and the broader ecosystem.
At the same time, with Safe’s modular smart accounts integration, developers are empowered to build better, web2-like experiences, supercharging new use cases from Gaming to DeFi.
Some of its main advantages are listed below;
  • Multi-Signature: The Wallet enhances security by requiring multiple parties to approve transactions, reducing the risk of unauthorized access or theft. Using a multi-sig approach adds a level of redundancy in the case of losing your private keys, as well as protects yourself from phishing attacks and hacks of your personal information.
  • Useful in shared funding, such as having a treasury for a DAO or an investment club between friends. In these situations, members of the DAO can vote on certain proposals and use a 6-on-10 scheme, where at least 6 signatures are required to authorize the proposal.
  • Safe Wallet is capable of holding your ERC-721 and ERC-20 tokens and also provides users with user-friendly UIs to keep track of everything without requiring any technical knowledge.
  • With the implementation of multi-sig, even if you lose one key, you can still access your funds with the other two.
  • Social recovery and formal verification: Safe offers an opportunity for social recovery which will allow an individual to recover his wallet with a confirmation from the other key signatories.
  • You can control and change account ownership: By adding new people who can sign in, removing those who are no longer needed, and allowing changes in account ownership, the same account is flexible for any future needs and more secure.
  • Web3 Dapps are accessible right from inside the Safe Wallet interface.
  • Before actually sending your transactions, you can simulate them to get instant prompts and a full analysis of their success or failure. Safe provides a simulation report that helps you understand the outcome and potential issues before the transactions are executed.
  • Safe safeguards against single points of failure, mitigate risks of unauthorized access or loss, and adds an extra layer of control for individuals, teams, or businesses managing valuable digital assets. This distributed approach prevents a single compromised key from compromising the entire wallet, making multi-sig wallets a reliable defense against theft and unauthorized access.
  • Always on Hand: With mobile access, approve transactions anytime, anywhere.

DISADVANTAGES OF SAFE WALLET

  • Very complex to set up.
  • Transaction cost.
  • Limited ecosystem support: Not all blockchains are supported at the moment.

FINAL THOUGHTS

In conclusion, Safe Wallet stands as a beacon of greatness and unparalleled security in the realm of blockchain wallets. For those seeking to fortify their digital assets and protect against the looming threats of hacks and financial misplacement, Safe Wallet is a resolute choice.
It's essential to recognize that Safe Wallet offers a robust shield of protection but may necessitate a degree of technical expertise for its setup. As users, it is prudent to weigh the advantages and disadvantages of this formidable tool, aligning them with your individual needs and preferences.
For those actively engaged in farming with zksync, the strategic use of Safe Wallet can yield exceptional results. Leveraging this wallet for transactions, particularly multiple usages, can lead to a substantial increase in transaction count, offering an advantage that is difficult to overlook.
This article has shed light on the intricacies of using Safe Wallet, uncovering its advantages and disadvantages. Our ultimate objective is to equip you with the knowledge and tools necessary to safeguard your digital assets through the implementation of multi-signature security. In the ever-evolving world of cryptocurrency, Safe Wallet emerges as a stalwart guardian, preserving your wealth and ensuring your peace of mind in the digital frontier.

Reference

© 2023 Crypto Alpha. All Rights Reserved.
Comments
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Andreas
last year
Great one! You should take a look at Squads Protocol. Would also love to see one on Jito!