Interview with Lukas Schor: Call me Safe not Gnosis Safe

Author：Sunny,TechFlow

Guest：Lukas Schor, Safe Cofounder

"A key aspect of Safe is its inherent modularity, which allows for future adaptability. "

-- Lukas Schor, Cofounder at Safe

Safe is the biggest account abstraction wallet in Web3, securing over $100 billion asset.

Today marks a significant milestone for Safe: "The Safe token contract is officially unpaused and SAFE is transferable."

Following this, Safe token trades at a $2.8 billion Fully Diluted Valuation (FDV).

The $100 billion asset secured and $2.8 billion FDV are two significant and symbolic figures for Web3 smart contract wallets. Last week, Safe successfully acquired a Treasury management platform backed by Sequoia Capital. These successive events have propelled Safe forward and signify a trend where more users are transitioning from externally owned account (EOA) wallets to smart contract wallets.

At the recent ETH Dubai event, Safe's co-founder Lukas also shared his views on ERC-4337 and the recently reignited discussion around EIP-3074. As the largest consumer-facing application in the smart contract wallet space, Safe's adoption of any standard is crucial, given its vast user base.

Lukas was also swiftly interviewed by TechFlow regarding Safe's stance on standard adoption within the smart contract wallet ecosystem.

 

Call me Safe not Gnosis Safe

TechFlow: Should Safe be referred to as 'Safe' instead of 'Gnosis Safe'? Is that the preferred brand you'd like to convey to the audience?

Lukas:

The history of Safe is deeply entwined with Gnosis; it's part of our DNA and forms what you might call a 'Gnosis Mafia'—a network including projects like Cow Swap. Despite the SEO challenges associated with the name 'Safe', we are committed to building and enhancing the brand around it. Our focus is on reinforcing Safe’s identity in the ecosystem.

TechFlow: Is SAFE built on the Gnosis chain?

Lukas:

Safe is versatile; our smart contracts are deployed across 100 different EVM networks, though from a usage standpoint, not all are major players. Originally, Safe spun off from Gnosis, which establishes a foundational connection. However, this relationship is more of a soft link rather than an exclusive commitment to the Gnosis system alone.

Safe Overview

TechFlow: Safe is the biggest smart account best known by its multi-signature system. Can you give a brief account of Safe?

Lukas：

The core mission of Safe is to convert every user account into a smart account.

Ownership needs to be secure; users should feel confident that they won’t lose access to their accounts by merely losing a private key. This is feasible with smart accounts, which move away from single private key dependency to more complex access controls, like multi-signature systems.

Safe extends beyond just multi-signature: it includes features like session keys for low-risk actions, two-factor authentication setups, and options for account recovery to create a hybrid custody solution where trusted parties can co-sign or block malicious transactions without initiating them.

Currently, SAFE smart accounts manage about $100 billion in assets, primarily from collective launches by teams and significant contributions from high-net-worth individuals and institutional players.

The shift to smart accounts offers various benefits, from improved user experiences to enhanced security and future-proofing against quantum threats, as traditional Elliptic Curve Digital Signature Algorithm (ECDSA) signatures are vulnerable.

Our project isn’t just about building technology but also about fostering an ecosystem. We're developing open-source tools and infrastructure to support various user groups transitioning to smart accounts, from retail traders to teams focused on treasury management. Safe is a collaborative effort to make quantum-resistant Web3 a reality.

Quick read on Safe history：https://safe.global/blog/history-of-safe

ERC-4337, EIP-3074, EIP-5003: Which is the best account abstraction route to go to?

TechFlow: Could you elaborate on the decision to use ERC-4337 or EIP-3074, and how this aligns with your broader strategy for account abstraction?

Lukas:

We're committed to the roadmap for account abstraction on Ethereum, focusing on the transition from EOAs to smart accounts.

Initially, we planned no protocol changes with ERC-4337, using the application layer and bundler paymaster ecosystem. However, the complexity meant starting with rollouts using EIP-7650 for a gas-efficient and decentralized approach.

The pivot to EIP-3074 by late 2024 reflects a practical step to enable batch transactions and easier migration from EOAs to smart accounts, leveling the playing field. This sets the stage for EIP-5003, which will allow full conversion of EOAs into smart accounts at the same address.

Our strategy emphasizes not just enhancing EOAs but pushing towards full native account abstraction to avoid stalling the progress. Integrating EIP-3074 with EIP-5003 will provide a clear upgrade path, ensuring a cohesive and efficient transition.

A detailed analysis of Account Abstraction standards:

https://x.com/SchorLukas/status/1779853700346917231

A keynote by Lukas at ETH Dubai: 3 routes to account abstraction - open to experiments

TechFlow: What is the connection between Safe and companies like Pimlico that provide Paymaster services?

Lukas:

Pimlico is essentially our partner, providing the Paymaster bundler infrastructure which Safe doesn't offer. They integrate this with Safe Smart Accounts, focusing on transaction sponsorship to enhance app usability. They also provide an SDK that allows developers to specify which transactions should be sponsored. This strategic integration broadens the functionality and accessibility of Safe's smart accounts.

Quick note: Safe is intrinsically built to be modular and adaptable. You can either use Safe with just its own account abstraction system or add an ERC-4337 module that makes it fully ERC-4337 adaptable. (Thank you Kristof Gazso, founder at Pimlico and coauthor of ERC-4337, for the comment.)

Smart Account is Quantum Proven

TechFlow: Earlier, you mentioned the threat quantum computers pose to EOAs. Could you elaborate on that?

Lukas:

Current cryptographic methods like ECDSA signatures are vulnerable to quantum attacks. As quantum computing advances, these vulnerabilities could be exploited, making the existing Ethereum accounts (EOAs) insecure. The community agrees that transitioning to smart accounts using advanced cryptography like Schnorr signatures is essential. Discussions include a potential emergency upgrade (akin to EIP-5003) in the event of a quantum attack, which would forcibly migrate accounts to smart accounts. However, a voluntary transition is preferred to avoid the complexities and risks of a forced, post-attack upgrade.

Keystore is Safe's next move

TechFlow: Could you choose a topic related to Safe's future that you're comfortable sharing more about?

Lukas:

I'm particularly excited about the potential of keystore rollouts.

Keystores will allow us to abstract away the complexity of networks from both users and developers. Ideally, users won’t need to worry about which network their assets are on, similar to how we don’t think about the server hosting a website we visit. This abstraction is crucial for simplifying interactions across various networks such as Optimism or Arbitrum.

Keystores centralize the access control mechanisms—much like a password manager—where you can manage your keys and perform operations like key rotations across all your accounts seamlessly. This is particularly beneficial for cross-chain operations, where you might have assets across different networks but can manage them through a single centralized keystore.

These keystores would typically synchronize with all linked accounts using cryptographic proofs, ensuring that any updates to your keys are automatically propagated. We're considering implementing these keystores on specialized rollups optimized for this function, which would interact with state proofs from various networks to provide current account statuses reliably.

This development aims to simplify managing multiple accounts across chains by having one unified access point. It resolves some of the prevalent issues with smart accounts, especially those related to state syncing and deploying accounts on multiple networks.

Safe is actively involved in this area, with Scroll and Base also working on prototypes. There are exciting updates expected in the coming weeks where Safe will play a significant role.

Will Metamask be a competitor?

TechFlow: Do you view MetaMask as a potential competitor to Safe in the future?

Lukas:

Considering Safe's mission to transition every account to smart accounts, MetaMask currently operates mainly with EOAs and has only partially adopted account abstraction through Snaps, which haven’t seen significant adoption. In this sense, they could be seen as competitors. However, their commitment is unclear, especially with developments like EIP-3074, which they haven't strongly endorsed. This EIP leans towards enhancing EOAs, unlike EIP-5003, which is a direct move towards smart accounts. MetaMask has built its platform primarily around EOAs, and a shift to smart accounts could significantly impact their current model. The extent of their support for smart accounts, which would align more with Safe’s goals, remains to be seen.

TechFlow:What would you say is Safe's competitive edge? Is it the go-to-market strategy that attracts diverse clients, the capabilities of the engineering team, or the agility of the organization?

Lukas:

Safe isn’t the most agile project, largely because our focus is on security, which can often be at odds with agility. Our smart contracts have been operational for seven years, securely managing over $100 billion in assets. This longevity and reliability contribute to the Lindy effect, enhancing user trust over time.

A key aspect of Safe is its inherent modularity, which allows for future adaptability. For instance, when new standards like ERC-4337 emerge, we can simply integrate new adapters to our Safe accounts, maintaining compatibility and flexibility.

Another competitive advantage is our commitment to open-source principles and neutrality in tokenomics. Despite Safe having its own token for governance, our core contracts remain token-free. This policy not only fosters an ecosystem built on trust and utility but also promotes network effects, as it attracts a broader developer community and facilitates shared learning and tool creation. These elements collectively strengthen Safe’s position as a foundational component in the smart contract landscape.

Secret to 100 Billion

TechFlow: In six years, how has Safe attracted such substantial capital, amounting to billions? Can you pinpoint a 'snowball moment' that catalyzed this growth?

Lukas:

Before Safe, the concept of a less opinionated, more efficient multi-sig like ours didn't exist. We introduced Safe as a superior solution—more gas-efficient and modular—but convincing people to transition from traditional setups to Safe was challenging. It took about one to two years to get 50% migration, especially because trust in smart accounts was low due to issues with other products like Parity.

Key milestones really helped accelerate this transition. Initially, Gnosis moved $50 million of their assets to Safe, demonstrating a strong vote of confidence. Shortly after, Bitfinex, a major centralized exchange, transferred all customer assets to Safe, totaling about $1 billion. Another significant endorsement came when Vitalik Buterin moved his ETH to Safe, which likely involved his own rigorous checks.

These pivotal movements created a snowball effect, significantly boosting trust and adoption of Safe contracts.

SAFE Token and Community Governance

TechFlow: Is there anything you'd like to share about the Safe governance token?

Lukas:

The Safe token is gaining traction, which might soon influence its perception. Interestingly, there was a pivotal governance vote just today. Originally, the Safe token was distributed as a non-transferable asset to ensure the community would have a say in its future.

This decision to potentially make the token transferable was left up to a community vote. Following the chaos in the industry caused by the FTX collapse, the community initially voted against making the token transferable. They set certain milestones to be achieved before reconsidering their decision.

Over the last one and a half years, we've worked towards these milestones, and today, a new vote was cast where the community approved making the token transferable. This change will take effect next week, on the 23rd. This marks the first time we've engaged in such an extensive community-driven process to change the token's status, and it'll be interesting to see the implications of this new phase for Safe.

TechFlow: What guiding principles or 'Bible' does Safe follow when designing its governance token?

Lukas:

From the start, we chose not to have any backers or investors buy equity, which distinguishes us from projects like Uniswap that might have conflicting interests due to their financial structures. The key entity behind Safe is a foundation, and the Safe token fundamentally represents the value of the ecosystem, which facilitates its operation.

Next week, we are introducing an additional utility for the Safe token, which is part of a new program involving key projects within the ecosystem. This is designed to encourage more users to migrate to smart accounts.

Although details are still under wraps, this update will add significant value to the Safe token. Furthermore, we are exploring creative ways to utilize the Safe token concerning transaction fees on Safe, but these ideas are still in the developmental phase.

Safe tokenomics: https://x.com/safe/status/1780249819975762081

TechFlow: How does the investment structure for Safe work, particularly regarding token warrants? Did investors not receive token equities as part of their agreements?

Lukas:

Unlike typical Web3 projects where backers often receive equity plus tokens, Safe's supporters purely bought tokens two years ago, aligning with our ethos. We deliberately avoided equity to prevent misaligned incentives that could detract from our mission as an open-source project. At Safe, we believe the project’s utility and value should be encapsulated within the Safe token itself, ensuring that all benefits directly enhance the token's ecosystem value without the complications of equity.

TechFlow: How does Safe incentivize investors to participate in governance? Do they also contribute to the portfolio's go-to-market strategies?

Lukas:

We streamlined our governance to avoid overwhelming token holders with frequent proposals. We also established a participation agreement early on, which clarified the legal aspects of governance involvement. This has given institutional backers the confidence to participate actively.

In fact, about 15% of the total token supply was voted on our last proposal, reflecting higher engagement compared to other projects, with over a thousand voters from 20,000 holders.

TechFlow: While I understand that smart contracts effectively replace traditional contracts, meaning 'code is law,' you still use off-chain agreements for governance.

How do you determine these regulations for your community? Is it more of a grassroots initiative or is it dictated by the foundation, especially given that you are based in Switzerland?

Lukas:

We implemented participation agreements that voters must accept on Snapshot. This off-chain solution was approved as the standard for engagement, ensuring legal clarity for everyone involved in governance. This framework significantly boosts voter confidence by defining the legal boundaries clearly.

How does Safe work with Web2&3 giants to bring users onboard?

TechFlow: Given your interactions with major Web2&3 giants, what are their perspectives on using Safe’s smart accounts to execute client transactions?

Lukas:

Various organizations use Safe for different applications. For example, Reddit utilizes Safe for NFT avatars, though I'm not privy to the details. Sotheby’s has used Safe for auctioning NFTs, benefiting from the security of not relying solely on a private key due to the high value of the NFTs involved.

Additionally, Budweiser used Safe when they purchased the beer.eth domain, using it as their profile picture on social platforms, a transaction worth $100k.

Safe's structure allows them to enforce corporate policies through multi-signature approvals and hierarchical controls, offering a secure, self-custody solution that avoids the risks of a single private key or shared passwords.

About 10% of all USDC is held securely in Safe. This significant use case underlines Safe's importance in the ecosystem. Circle is particularly interested in how we can optimize this for users who hold USDC in Safe, such as exploring ways to generate interest in these holdings.

TechFlow: Can you discuss your strategies for onboarding Web2 users into the ecosystem?

Lukas:

Passkeys might be the most impactful development this year for authenticating transactions on-chain.

Distributing private keys has always been a challenge in cryptography. Currently, people use a 12-word seed phrase to manage their keys, but it's easy to lose or store improperly.

Passkeys aim to solve this by simplifying how private keys are generated and stored, thanks to standardization efforts by Apple, Google, and other Web2 companies looking to replace passwords. This would allow for storage in systems like iCloud Keychain, enhancing interoperability and security.

This setup would enable passkeys to manage account actions and eventually, we could see every domain, email, or AI agent manage on-chain accounts through methods like ZK proofs that verify off-chain states.

Although some smaller teams are exploring passkeys, large-scale adoption isn't immediate. For instance, Shopify is examining this technology, but typically, a rollout would be signaled 6 to 12 months in advance, and we haven't seen strong enough indications of a full commitment this year. From Safe's perspective, we're keeping track of these developments but don't expect widespread adoption to happen just yet.

Previous conversations on the Gnosis ecosystem:

https://techflowintern.substack.com/p/gnosis-cofounder-dr-ernst-frederike