Safe’s Strategic Move Towards Token Transferability and Democratised Decision-Making in Web3
In Brief
In an exclusive interview with Christoph Simmchen, co-founder of Safe, we delve into the core tenets of Safe’s mission regarding digital ownership in Web3 and its strategic approach to achieving this vision.
As the Hong Kong Web 3 Festival comes to an end, Christoph Simmchen, co-founder of Safe, seized the opportunity to share his insights on the new developments reshaping the Web3 landscape. Amidst the fervour of this groundbreaking event, Christoph offered illuminating perspectives on Safe’s mission, delving into the core objectives driving the Safe {Core} Protocol and its revolutionary approach to digital ownership and security.
What is the primary objective of the Safe {Core} Protocol, and how does it aim to address the limitations of externally owned accounts on the Ethereum Virtual Machine?
One of the biggest misunderstandings is that Safe is just a multi-sig. In reality, it is so much more than that, and the multisig is just one of the first configurations of a smart account. Smart accounts, in general, and Safe, in particular, can offer so many more security improvements.
But you can also go into really sophisticated setups where you can have roles and hierarchies and pretty much mirror all the corporate governance of an organisation on the account level without actually the need to trust, like, your team members. And so this is something where we can actually get a trust-minimised setup. This is something that we all care about. That is one of the improvements from the security perspective.
If we talk from the user experience perspective, we are in the process of many users being overwhelmed by the complexity of crypto right now. With externally owned accounts, we need to force users to understand every single step when they are signing a transaction, and smart accounts are equal to account abstraction. Safe is and has always been account abstraction. You can pretty much just abstract all of the complexity away from the accounts and trigger the transaction the users care about.
I think not everyone understands every transaction of TCP/IP. You just don’t need to understand how the internet is working because there are certain trust assumptions in it. In crypto, we are trying to make things more complicated than they need to be, so we also want to simplify them without compromising security.
How do the principles of utility token design intersect with the objectives of the Safe {Core} Protocol? What considerations are taken into account?
So, our overall token issuance is driven by the fact that 8 million Safe accounts are securing 120 billion US dollars. This equals 5% of all crypto assets out there. By that product market fit, Safe is a critical backbone to the overall Web3 industry. And such a backbone should not be governed by a single player if we all care about decentralisation. So, the major utility of our token is to give our stakeholders a say in the future direction of the protocol.
This is where we mainly focus on governance rights. We are also very sure that governance rights are working on several value accrual mechanisms, which will be beneficial to the overall ecosystem while still not risking the utility functionality of the token.
Have you faced any regulation issues in various European countries?
No, because one of our major benefits is that we are not touching any of our users’ assets. We are not able to externally upgrade any accounts from them. What we are pretty much doing is developing and publishing open-source code by the end of the day. Even though regulators are reaching out to us, we do not have the technical capabilities to freeze any assets as well.
Safe offers a Keystore Contract as one of the solutions for the smart contract’s problems, such as key rotation. So, can you elaborate on the security, user experience, and privacy benefits of using a keystore for account authentication?
One of the downsides of smart accounts so far is that they are not made for a multi-chain context because smart accounts do not have the same addresses of different networks. You need to deploy a different address, and this is just another complexity we add to the transaction flow because this is now prone to human mistakes. If you are in a rush, if you are sending your assets to the wrong address, those assets are gone, and so this is something where externally owned accounts are more beneficial.
One of the solutions to this is actually to have a keystore rollup. It is similar to a password manager on different kinds of networks. This is just abstracting the complexity away that you might click on the wrong address because it’s all automated. It is something that happens to very professional users as well; they deal with millions or billions of US dollars, and they are just in a rush and sending it to the wrong address.
When we are still facing this kind of situation, we are fairly far away from mass adoption. This is why we took the opportunity to say we are spending resources on it and trying to provide a solution for the benefit of the overall industry.
What is the significance of enabling token transferability for the SAFE token? How does it contribute to the governance process within the Safe {DAO} ecosystem?
We issued the safe token as a non-transferable token while also airdropping significant amounts of tokens to existing users of Safe and also building projects on top of the network. Our impression of token ownership means that it should be a decision of the community themselves to decide when to make the token transferable. The community was treating this kind of decision-making power in a very prudent way. They said, let’s first of all align on several milestones that need to be achieved, and then we can vote on token transferability.
Those kinds of milestones also comprise a governance system: What kind of DAO native OKRs do we want to have? How do we want to spend our money? So, it’s pretty much like running an organisation, but in a more decentralised way. Safe DAO met all of those milestones in the past, and they are right now voting on token transferability with close to a 100% acceptance rate, which makes it fairly likely that the token will become transferable in the next two weeks.
Could you elaborate on the potential risks and challenges associated with deploying autonomous AI agents in blockchain-based solutions? Do you think AI will get mass adoption in terms of trading?
I’m not sure whether there is actually a future where we can clearly say that AI is more present than human-owned accounts or if we are just coexisting. I still think there are many people who want to stay in control and want to make their own decisions. Still, there are also others who might want to deploy an AI agent, and maybe everyone who owns a control is also letting an AI agent run, like, some of their investments, and they just try to compare results.
What’s super interesting is that Safe accounts, which are controlled by autonomous agents, are a prime example of the benefits of smart accounts because an externally owned account is fairly stupid in the sense that it can just trigger transactions.
A smart account is a fully programmable account, and this is where AI comes into play. They can just say you can pretty much implement every if-then condition. You could say if the price of X is going to the amount of 1 to 3, please execute transaction Z, or pretty much the imagination of the capabilities of the autonomous agents are the limits. This is something an externally owned account cannot support, and if you want to have autonomous agents controlling an account, they need to use a smart account such as Safe.
Let’s talk about your upcoming event in Berlin. One of the slogans is that you aim to onboard 1 billion owners to Web3. How do you plan to achieve this goal?
I think we are right now in the middle of the slippery slope effect towards smart accounts. We see that the overall industry is talking about this. We see major players such as Coinbase and all the other exchanges launching their smart accounts. What we care about is the usage of the infrastructure.
One of the biggest unique selling points of Safe is that we don’t necessarily need to own the end-user relationship. Other kinds of providers can also build on top of Safe, and we want to empower them to build the best accounts. The prime example is Worldcoin.
I think if we are just getting a few more of those partners, it’s fairly realistic to get to 1 billion accounts, depending on the time frame. Obviously, this is a very ambitious goal, and this is nothing we are aiming to achieve in 2024 alone. On the long-term horizon, I think it’s ambitious but achievable.
What about the Hong Kong Web3 Festival? What were your plans in the beginning, and what have you achieved by now?
I think Hong Kong was actually way better than I expected it to be. I started to meet one or two people, and everyone was so kind and supportive. They were introducing me to their networks, and from then on, I was pretty much triple booked at back-to-back meetings. I was talking here about so many great projects I was not even aware of, and I’m super excited about all of the follow-ups and seeing what we can execute out of them.
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About The Author
Viktoriia is a writer on a variety of technology topics including Web3.0, AI and cryptocurrencies. Her extensive experience allows her to write insightful articles for the wider audience.
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Viktoriia is a writer on a variety of technology topics including Web3.0, AI and cryptocurrencies. Her extensive experience allows her to write insightful articles for the wider audience.
