This edition of the newsletter dives into SAFE, one of crypto's most widely used solution for DAOs and organizations to manage their treasury and how they are a dark horse in terms of revenue generation. We'll also share some interesting articles, portfolio updates and market highlights.
1. Research Articles
a) Setting Your Pet Rock Free
• The article introduces a groundbreaking approach to creating truly autonomous AI agents by using Trusted Execution Environments (TEEs) to give AIs exclusive and verifiable control over their social media accounts and cryptocurrency wallets, demonstrated through the deployment of @tee_hee_he on Twitter.
• Unlike traditional AI agents that can be manipulated by their creators, this system uses hardware-based security to ensure that once credentials are delegated to the AI within the TEE, even the developers cannot access or modify the accounts, making it the first provably autonomous AI agent system where third parties can verify no human is pulling the strings.
b) Sybil Attacks: The Silent Killers of Crypto Applications
• Sybil attacks, where malicious actors create multiple fake identities to manipulate blockchain applications, have become a critical threat to crypto platforms, particularly affecting token airdrops, governance processes, and user analytics.
• While current solutions like analytics-based approaches and Proof-of-Personhood systems offer some protection, they have limitations in terms of cost and scalability, leading companies like Portex to develop new solutions such as Wilbur, an AI-powered system that functions like a CAPTCHA for blockchain applications by combining transaction graph analysis with Web2 API verification.
c) Find the Next Solana
• The current landscape of L1s are seeing new contenders (Sui, Aptos, Sei, Monad, and Berachain) attempt to challenge Solana's dominance, each offering unique technical improvements and specialized features.
• While these new L1s show promise in areas like gaming (Sui), enterprise adoption (Aptos), and community building (Monad and Berachain), their success will likely depend not just on technical superiority but on their ability to build devoted communities, establish specific market niches, and create sustainable financial incentives for users.
2. Portfolio Highlights
a) Solv Protocol x Infrared Finance
• Solv partners with Infrared and will deploy Infrared Vaults to enable users to obtain the best out of PoL in one-click.
• Users deposit Solv assets into Infrared vaults > Infrared provides liquidity to partnered dApps > users get rewards in the form of $iBGT & $iRED (Infrared's governance token).
Introducing our first Bera fren, Infrared, a protocol building the infrastructure around the Proof of Liquidity (PoL) mechanism pioneered by Berachain.
Dive in
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b) Arrakis Finance
• Automated Market Makers (AMMs) in DeFi are experiencing significant challenges due to MEV (Maximal Extractable Value) extraction and LVR (Loss-Versus-Rebalancing), where liquidity providers (LPs) are losing value to arbitrageurs who exploit price discrepancies.
• To address this, new AMM designs like HOT are emerging that use offchain systems such as oracles, batch auctions, and request-for-quote mechanisms to reduce LVR and protect LPs, potentially marking a renaissance in AMM technology that could make liquidity provision more sustainable in DeFi.
c) SQD
• SQD Cloud, a hosted deployment solution for blockchain data indexers, has introduced new features called Cloud Deployments 2.0 which replaces version numbers with Slots and introduces Tags to improve collaboration and deployment management.
• These backward-compatible changes aim to make it easier for development teams to track deployments, manage workflows, and collaborate across different time zones without requiring changes to existing setups.
d) Vanilla Finance
• Vanilla Finance is making cryptocurrency trading more accessible through low-cost entry points, leveraging popular communication platforms like Telegram.
• They got selected in Season 8 of Binance's Most Valuable Builder (MVB) Accelerator Program, a 4-week program run jointly by BNB Chain and Binance Labs.
e) Tellar
• Teller offers fixed APR loans in DeFi where borrowers know exactly how much interest they'll pay throughout the loan term, calculated simply by dividing the APR by 365 for a daily rate and multiplying by the loan duration.
• This contrasts with variable APR loans common in DeFi money markets, and Teller's approach provides benefits including predictable costs, protection from market volatility, and no risk of liquidation due to interest rate spikes, making it suitable for both DeFi activities and real-life expenses.
3. Gnosis SAFE - The Sleeping Cash Cow?
Introduction
SAFE is primarily known as the leading provider of multi-signature (multi-sig) wallets for teams, DAOs, and organizations to manage their funds. Beyond this, SAFE offers comprehensive wallet infrastructure built on smart contract wallets, with its main business lines including Safe{Wallet}, their smart contract wallet solution, and Safe{Core}, an open-source and modular account abstraction stack.
Running the show from the shadows
While crypto natives frequently discuss multi-sig technology, many don't realize that SAFE is the dominant infrastructure provider in this space. Trusted by major projects like 1inch, Aave, and Chainlink, and supporting a wide range of EVM networks, SAFE has established itself as a crucial cornerstone of the crypto ecosystem due to the massive value it safeguards.
SAFE{Wallet}
SAFE serves as critically important infrastructure for crypto users and developers, safeguarding digital assets for projects, DAOs, institutions, and individuals. As of October 2024, SAFE manages over US$70 billion worth of assets across more than 25 million safes, which have collectively executed more than 97 million transactions. These numbers clearly demonstrate SAFE's strong Product Market Fit (PMF) and highlight the widespread adoption of smart contract accounts.
Safe{Wallet} offers top-grade security and audited contracts, providing multi-sig self-custodial wallets that promote decentralized co-ownership of assets. Additionally, Safe{Wallet} can be accessed via mobile applications on both the App Store and Google Play Store, ensuring convenient access for all SAFE users.
SAFE{Core}
Safe{Core} provides a comprehensive set of open-source tools and infrastructure that developers can leverage to implement secure, battle-tested account management features in their applications. Its key features include various forms of account abstraction, such as chain abstraction and payment abstraction. Safe{Core} also enables seamless integration with the robust Safe Ecosystem, which currently supports more than 200 projects building tools for identity abstraction, DeFi operations, on-chain governance, and asset management.
The account abstraction stack comprises the Safe Core SDK, which offers developers a comprehensive account abstraction toolkit. Additionally, it includes the Safe Core APIs, designed to enhance existing project interfaces, and the Safe Smart Account, a modular and extensible smart contract account that accommodates diverse use cases.
Use cases
The impact of SAFE on the crypto ecosystem is undeniable. According to Areta, SAFE secures more assets than any Layer 1 or Layer 2 blockchain, including Ethereum.
SAFE’s use cases span multiple sectors within crypto:
• Payments: Gnosis payment wallets are utilizing Safe for secure transactions. Read more.
• Social: Farcaster’s Frames are built on Safe, leveraging Safe accounts. Learn more.
• Digital Identity: Worldcoin has integrated Safe accounts through proof-of-humanity verification. Details here.
• Institutions: Safe provides institutional-grade security for organizations like 1kx and Wintermute. Explore more.
• Ecosystem Layers: Platforms like Celo and Polygon zkEVM have integrated Safe to enhance user experience. Celo integration, Polygon zkEVM integration.
• NFTs: Punk6529’s gallery is powered by Safe, showcasing its application in the NFT space. Find out more.
In the next section, we will discuss how SAFE’s traction can convert into revenue and potential upside for the SAFE community.
Crouching Tiger, Hidden Dragon
In May 2024, SAFE launched native swaps which allowed Safe{Wallet} users to trade tokens within their wallets. Later in July 2024, SAFE introduced TWAP Orders and tiered fees in Safe{Wallet} native swaps, adding more functionality to their native swaps.
In September 2024, the SAFE Ecosystem Foundation put out a proposal for the revenue generated from native swap to be pledged to SafeDAO. This marks the first revenue stream for the SAFE community.
Taking a look at data on-chain, native swaps on SAFE generated a total of US$1.6 million in annualised revenue (based on the tiered fee model). However, at present, only slightly more than 0.01% of Safes utilised the native swap function.
We believe that this number is not representative of the demand for swaps in DeFi. According to Nansen, there were more than 1.2 million unique traders who used decentralised exchanges (DEX) throughout 2022. Cross-referencing a report by Grayscale that estimated there to be around 7 million DeFi users in 2022, it can be estimated that around 17.14% of DeFi users utilise swaps. However, given that Safes are generally used for treasury management, it is likely that swap usage amongst SAFE users might not be as high. Taking the most conservative projection as reference, with just 1.71% of Safe’s utilising native swaps, this is estimated to produce more than US$274 million in total annualised revenue. For reference, Uniswap generates an estimated $703 million in annualised fees, while Curve generates an estimated US$27 million in annualised revenue.
SAFE currently commands a whopping US$74.2 billion in Total Value Locked (TVL) across its safes. Moreover, much of this TVL has yet to get involved in revenue-generating native swaps. Additionally, on SAFE’s roadmap is the introduction of revenue generation from native staking as well as a possible fee-sharing mechanism in the future. Considering SAFE’s huge untapped market as well as its future revenue streams, this could very well be the making of the next revenue generating beast.
This article was written by @ahboyash and @0xsamoyed.
*Disclosure: SAFE is Signum Capital’s portfolio company and the information provided on this newsletter is for general informational purposes only and does not constitute professional nor investment advice.
