The Block - How Safe Aims to Simplify Crypto UX

In this episode of the Block, which took place on April 23, 2024, Larry and Richard discuss Safe, its user base, business models, account abstraction, $SAFE token, Ethereum layer-2s, and more. Read our notes below to learn more.

Background

Larry Cermak (Host) – CEO of the Block
Richard Meissner (Guest) – Co-Founder of Safe
Safe – a smart wallet solution

Introduction

Richard provides an overview of Safe’s journey, starting with his joining Gnosis to bring secure asset management experience. The initial focus was on developing a mobile app but pivoted towards high-value assets and multi-signature features. They transitioned to a web application in 2021 marking a shift towards building an ecosystem around Safe as its own entity separate from Gnosis.
He makes a distinction between Safe Wallet (end-user product) and Safe Core (tool stack for developers). The web interface targets high-value users interested in DeFi, while the core product aims to broaden accessibility to non-crypto natives.

Safe’s User Base

Richard says that smart accounts aim to extend crypto usability beyond DeFi applications to provide a more familiar web2 experience for end-users. Smart accounts offer flexibility in custody options, allowing users to choose between full self-custody or hybrid custody models with recovery services available.
He adds that the team is storing a significant amount of value, surpassing most smart contracts. There is a dual focus on driving up stored value and onboarding millions of users.
Richard says that two dedicated product teams work on different initiatives related to TVL and user engagement. They put emphasis on enabling users to tap into their TVL securely.
He adds that there are initiatives to showcase smart contracts for the masses rather than a small user base. There are collaborative efforts to enhance user experience with passkeys and counter deployments.

Business Model

Richard says that the primary focus remains within the Ethereum ecosystem with limited branching away from EVM.
He adds that the long-term vision involves making core smart accounts free for widespread adoption while leveraging tokenomics for value capture.

Account Abstraction

Richard says that Ethereum defines accounts with specific behaviors using the Elliptic Curve Digital Signature Algorithm (ECDSA curve) for tracking. Account abstraction aims to make the system more flexible by not being tied to specific curves or fee payment methods. Both blockchains like Ethereum and dApps enforce standards related to account abstraction for validation and identification purposes. Account abstraction enhances flexibility by defining accounts based on interfaces for validation and identification. Smart accounts should be modular to minimize risks associated with complex functionalities.
He adds that smart accounts pose risks due to complexity; modularity helps reduce errors by breaking down functionality into smaller pieces. Core modular accounts provide essential functions like multi-signature components while allowing extensions for customized features.

EIP-3074

Richard says that EIP-3074 enables external actors (invokers) such as smart contracts to control certain aspects of an externally owned account (EOA). Similar to modular safe modules, EIP-3074 allows functionalities like batch transactions and conditional flows without changing ownership states. Controversy arises as empowering EOAs through EIP-3074 questions the necessity of switching entirely to smart accounts for enhanced flexibility.
He adds that the team contemplates empowering smart accounts progressively until they transform into smart accounts, indicating a directional shift in strategy. Concerns arise regarding splitting focus and losing efficiency in pushing forward due to diverging directions within the team.
Richard says that they put emphasis on the abstraction ecosystem and developer resources, highlighting the need for unified efforts rather than fragmentation. Security discussions surrounding technical complexities and next steps are ongoing, with implications for user understanding and system integrity.
He adds that the lack of enforcement mechanisms in current protocols leads to uncertainty about future steps and creates distractions that slow down progress. Mixed reactions within the team indicate confusion and a lack of unanimous excitement over recent approvals.
Richard says that debate ensues over whether implementing EIP-3074 was necessary or if alternative approaches could have been more beneficial. Defensive stances from core developers concerns about technical complexities amid upcoming hard forks.
He adds that exploration of layer-2 native functionalities prompts reflections on resource allocation between layer-1 and layer-2 developments. Balancing excitement for new features with existing commitments underscores challenges in prioritizing development efforts effectively.

Keystore Rollup

Richard says that they introduced Keystore Rollup as a solution for managing state across various blockchains efficiently.
He adds that network configurations are managed on a separate chain, similar to how all chains roll up to the main net. Accounts on the main chain serve as references for other accounts using proofs, enabling interactions across various chains. Mainnet is avoided due to its high costs, especially for updates and proofs like Merkle tree proofs and Verkle proofs. Proposing a dedicated rollup solely for account storage using ZK technology to simplify proof processes across networks.

Ethereum Layer-2s

Richard says that layer-2s are rapidly emerging with several major options available; maintaining an agnostic approach allows users flexibility in choosing solutions. Safe Account’s core contract aims for agnosticism with minimal hardcoded values, facilitating compatibility across different networks without significant adjustments.
He adds that smart contracts serve as core primitives requiring deployment across numerous networks without substantial modifications at a contract level. Tooling challenges arise concerning gas parameters reporting variations necessitating selective adjustments off-chain rather than on-chain.
Richard says that they put emphasis on supporting diverse developer networks aligning with the account abstraction narrative while prioritizing value-creation opportunities. He acknowledged the limitations in handling all networks underscoring commitment to open-source ethos allowing partners to stake running services independently.
He adds that zkSync’s network design challenges conventional address structures, encouraging innovative thinking. zkSync implements native account abstraction, facilitating the testing of various functionalities.
Richard says that Polygon pioneers the implementation for PassKey sensor functionality. This innovation excites developers by offering opportunities to explore new technical aspects.
He adds that utilizing the Keystore approach allows identity management across multiple networks like Solana. He emphasizes the power of interoperability and shared identities across ecosystems.

$SAFE Token Design

Richard says that Gnosis stands out for its transparent communication regarding token plans compared to more secretive projects in the space.
He adds that the Foundation should signal actions unless regulatory constraints prevent it. They are providing the DAO a mandate within the foundation to influence decisions. They initially designed the token as non-transferable to avoid distractions in the early stages of ecosystem development.
Richard says that they involved existing users and teams in decision-making for token transferability. The initial vote was against transferability to focus on utility research first.
He adds that they utilized off-chain snapshot voting tied to Safe balances for decision-making. Ongoing vote with significant participation indicates community engagement.
Richard says that the Safe module is connected to an Oracle system named Reality.eth for voting verification. Escalation game within Realit.io ensuring accurate voting outcomes.
He adds that utilizing cooldown periods for each step towards token transferability implementation.
Richard says that fluctuating token prices introduce overhead concerns but also unlock various opportunities within the ecosystem. Token availability allows for easy acquisition by new users, fostering engagement within the ecosystem.

Closing Thoughts

Richard says that a major challenge for developers is pinpointing the core issues amidst numerous tasks, leading to feelings of being overwhelmed.
He adds that returning to fundamental principles, especially in smart contract systems, is crucial to avoid jumping to complex solutions that may not address user needs adequately.
Richard says that rating progress is below five out of ten in terms of making blockchain technology user-friendly for non-crypto natives like parents or less tech-savvy individuals.
He adds that progress made in developing key support for smart accounts and implementing ZK knowledge proofs signifies advancements; however, effective integration remains a challenge.
Richard says that the concept discussed opens up numerous possibilities within the ecosystem. It enables re-engagement with the ecosystem to build tokenomics around these primitives. He emphasizes the importance of creating a safe environment for both core and wider ecosystems.

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Show Information

Medium: YouTube (Video)
Show: The Block
Show Title: How Safe Aims to Simplify Crypto UX | The Block Research Podcast Ep. 6
Show Date: April 23, 2024