The most infamous problem encountered across Web3 is handling of one’s digital assets safely and having multiple-layers of executional functionality on top of it to make smart transactions.
This gap was initially filled by Externally-Owned-Accounts or popularly known as non-custodial wallets (MetaMask, Trust Wallet and more) whereby users hold the public and the private key pair by themselves.
But, these wallets posed another challenge of safeguarding the all mighty private key by themselves with no recovery mechanism. The private keys holds the access to all the funds in the wallet and thus started becoming a major pain-point for loss of funds due to misplaced private key and inability to recover it.
As the use-case grew significantly, a turn-key solution came into existence by Gnosis, which placed itself initially as a prediction markets platform, then jumped into creating Multi-Signature Wallet technology (aka Multi-Sig wallet) that proposed to solve the complexity of managing private key for individuals and businesses alike.
Overview of Gnosis Multi-Sig Technology
It is imperative how smart-contracts have enabled development of breakthrough decentralised application ecosystems, enabling a larger throughput of digital assets. Its use in building self-custody wallets and on-chain governance paved the way for multi-signature technology, led by Gnosis.
Gnosis Multi-Sig was one of the first successful attempts to empower existing externally-owned software wallets in advocating the merits of holding key assets into a multi-signature wallet, that facilitates organisations and individuals to improve their wallet-based security parameters.
With its extended use-case and implementation by both small and large scale enterprises, Gnosis updated Multisig to now whats called Safe adding an even rich stack of features such as DeFi integrations, support of ERC-721 tokens (digital arts, ENS names or game assets), gasless signatures, formally verified highest-security standard for Ethereum based protocols.
In a nutshell, Gnosis Safe engineered an EVM compatible, smart-contract run wallet, that divides the confirmation process of a transaction from a single-node entry to multiple predetermined addresses or signatories who approve of a particular transaction. This process ensures the account is managed collaboratively by multiple stakeholders instead of just one.
Furthermore, self-custody is another factor that pushes the envelope of building trustless digital asset storage. While the solution is focused primarily on organisations holding their major portion of treasuries in cryptocurrencies, individuals have also started using Gnosis as their go-to wallet to protect their assets from hacks or thefts by solely relying on guarding their private keys.
User-Friendly Gnosis Safe Feature Stack
Gnosis Safe has definitely matured in its stride to offer an array of unique features, that has made the use-case of multi-sig wallet a lot more usable and user-friendly:
Customisable Signatories Addresses
Gnosis was made to bridge the gap in the existing non-custodial wallets, where a single private key locks and unlocks the transaction operability. As more and more Web3 projects and protocols started to emerge and create their treasuries it became increasingly important to add custom facility of adding ‘n’ number for stakeholders as owner accounts and a minimum threshold who approves of a transaction to be completed. The ease of adding signatories, changing their permissions and maintaining an organised financial workflow makes Gnosis a go-to wallet option.
Any Wallet Transaction Signatures
Gnosis Safe being a smart-contract based wallet enables a seamless integration of external wallets to allow all the signatories to sync in their existing wallets be it mobile wallet, browser extension or hardware wallets and sign for the transactions. This feature makes it simple for users to use Gnosis multisig security.
DeFi Ecosystem Compatibility
Gnosis being used at length by Web3 teams to interact with other protocols, provides an interface that fosters easy utilisation of funds to invest, borrow, earn, invoice, payroll and more. Marking this utility, Gnosis has garnered huge TVL from enterprises, making the process of rather simple and effective.
While it is common for most Web3 based applications to be more receptive on desktop and browser settings, Gnosis has made it widely accessible by introducing its mobile application as well on android and ios devices.
In the most common scenarios of using EOA wallets, after losing private key it becomes impossible to retrieve it, but due to distributed access amongst multiple owners, the Safe can be accessed using the other owner's wallets.
A Powerful Tool For Digital Asset Safeguarding
It is evident how Gnosis has changed the scope of digital asset safeguarding, especially for institutions that empower the space with an active influx of high-volume transactions. As of Q2, 2022 Gnosis covers ~75% of the current AuM in DeFi. Currently, it's the most widely adopted and reliable multisignature solution utilised by DAOs to manage their treasuries, with approximately $40 billion in assets under management.
The applicability of Gnosis Safe, its widespread adoption by industry-leading enterprises and its high compostability has uniquely positioned it for any finance team to opt when dealing with their asset management solution. Furthermore, Gnosis has also led an extensive development of its SDK infrastructure, allowing developers to build on top of Gnosis Safe adding custom experiences for organisations having variable custody, security and signatory requirements.
What’s most exciting to see is this turning the concept of ownership of a decentralised wallet further decentralised by Gnosis, sharing the transaction processing responsibility through multiple stakeholders, which will construct a new narrative of how more protocols will protect their assets and work collaboratively.