State of Safe Q2 2024

Key Insights

• Safe witnessed an all-time high in most usage metrics in Q2’24. Safe users continued to derive value from the core wallet product, with 2.7 million monthly active accounts in Q2’24 (up 67% QoQ) across Safe’s multiple deployments on 15+ networks.
• The overall share of transactions originating from Safe smart accounts reached 2.7% in Q2’24 (up from 2.3% in Q1’24). Simultaneously, gas fees originating from Safes grew 58% QoQ.
• While Optimism accounted for 93% of transactions and 96% of MAUs in Q2’24, its corresponding share of all assets stored in Safes ($83 billion as of Q2) was 5%; in turn, Safe accounts on Ethereum stored 89% of all assets, which are moved less frequently.
• The Safe community voted in favor of making the SAFE token transferable as of April 23, 2024. Simultaneously, a successful proposal introduced strategies to enhance the utility of the SAFE token by linking ecosystem activity to token utility.
• In Q2’24, Safe announced the launch of native swaps, as well as tiered fees and time-weighted average price (TWAP) orders for native swaps.

Primer

With over $83 billion of assets stored in 10+ million deployed smart accounts as of Q2’24, Safe is one of the go-to solutions for smart contract wallets. Previously called Gnosis Safe, Safe aims to create the standard for ownership with smart accounts.

Safe is largely used as a multi-sig wallet. It enables individuals to securely self-custody their funds and organizations to manage their treasury operations effectively. As per Messari's wallet landscape analysis, Safe is a wallet infrastructure aggregator, in addition to offering smart contract wallets. Safe thus serves both as a:

• Safe{Wallet}: Main product in the form of a smart wallet solution (i.e., Safe’s user-facing smart contract wallet), and
• Safe{Core}: Infrastructure protocol that powers both Safe’s wallet solutions and other projects (e.g., Worldcoin).

Safe{Core} Protocol takes a vendor-agnostic approach to enable any developer to contribute to the protocol. Additionally, one of the key considerations for the Safe{Core} Protocol will be fee design and implementation.

Safe community voted in favor of making the SAFE token transferable as of April 23, 2024. Simultaneously, a successful proposal brought up strategies to enhance the utility of the SAFE token by linking the ecosystem activity growth to token utility.

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Key Metrics

Network

The usage of Safe can be gauged in terms of account and transaction activity across Safe’s multiple deployments. As of Q2’24, Safe has been deployed on 15+ networks, including Optimism, Polygon, zkSync, Arbitrum, Avalanche, Base, BNB Chain, Celo, Ethereum, Fantom, and Gnosis Chain.

Active Accounts

Monthly average users are measured as Safe smart accounts with at least one outgoing transaction a month.

Safe had over 2.7 million monthly average users in Q2’24, up 67% QoQ from 1.6 million in Q1’24. The number of monthly average Safe users on Optimism surged to 2.62 million in Q2’24 (up 67% QoQ), totaling a whopping 96% of Safe’s monthly average users in Q2’24. Polygon, zkSync, and Base accounted for 1.5%, 0.7%, and 0.7% of Safe’s monthly average users in Q2’24, respectively.

The rise in Safe accounts on Optimism can be largely explained by the Worldcoin protocol deciding to migrate to OP Mainnet in Q2'23. Since then, Worldcoin has deployed Safe smart accounts on the OP Mainnet for its World App users. As of June 30, 2024, a total of 3.1 million Worldcoin smart accounts have been deployed on Safe.

Following the announcement of the World Chain Layer-2 in April, the number of monthly active users of Safe smart accounts on Optimism continued to grow. For context, the Dencun upgrade implemented EIP-4844, which has led to significant reductions in transaction fees on Layer-2s. In turn, the lower transaction costs may alleviate the issue of high usage costs associated with smart wallets, as per Messari’s analysis.

New Accounts

Over 1.8 million Safe smart accounts were newly created in Q2’24, down 20% QoQ from 2.2 million in Q1’24. In terms of the corresponding chains, Optimism accounted for 1.3 million newly created Safe smart accounts, i.e., 73% of all Safe accounts newly created in Q2’24, down 31% QoQ. Simultaneously, Base, Polygon, and zkSync accounted for 172,000 (10%), 129,000 (7%), and 114,000 (6%) of newly created Safe smart accounts, respectively.

Compared to Q2’23, newly created Safe smart accounts on Polygon were down 85% YoY. This growth divergence between Optimism and Polygon can be explained by Worldcoin migrating in Q2’23 from Polygon to Optimism’s ecosystem via OP Mainnet.

Adoption Rate

In line with the growth in active Safe users, transactions involving Safe smart accounts — Safes — surged 67% QoQ from 16 million in Q1’24 to 27 million in Q2’24. For perspective, the share of Safe transactions relative to all transactions reached 2.7% in Q2’24, up from 2.3% in Q1’24.

The vast majority of Safe onchain activity now happens on Layer-2 scaling solutions, with Optimism accounting for 93% of all Safe transactions, followed by Gnosis, Polygon, and zkSync with 2%, 1%, and 1%, respectively. As per Messari's wallet landscape analysis and the recent infrastructure vs. app debate, infrastructure aggregators such as Safe are expected to further benefit from an influx of new crypto applications.

Financials

Currently, Safe does not generate any revenues from its smart contract wallet or its general suite of product offerings. However, the gas fees originating from Safe smart contract wallets can serve as a proxy for the value associated with Safe across its multiple deployments. One of the key considerations for the Safe{Core} Protocol is the fee design and its potential implementation.

While a recent proposal, followed by a sprint, introduced strategies to enhance the utility of the SAFE token and potentially generate revenue by linking ecosystem activity to token utility, it remains to be seen how these change proposals will be implemented. Initial steps have been undertaken through the announcement of the Safe{Pass} activity program, aimed to reward the most active Safe accounts and ecosystem participants.

Transaction Fees

Gas spent on Safe transactions grew 58% in Q2’24 to nearly 1,600 billion gwei, or 1,600 ETH, in line with the growth of transactions involving Safes. With the general activity migrating from Ethereum Mainnet to scaling solutions like Optimism, and the introduction of EIP-4844, Safe may see lower average fees per transaction in the coming quarters. However, the expected reduction in average fees per transaction may continue to be offset by a growing user base catalyzed by low-fee Layer-2 chain activity.

Assets Stored in Safes

A further way to gauge the economic value of Safe accounts is to consider assets under management (AUM). In the case of Safe, the dollar value of assets stored in Safe smart accounts is a suitable proxy for AUM.

As of the end of Q1’24, there was over $83 billion in assets stored in Safes, after reaching an all-time high of $106 billion in Q1. The drop was in line with the overall crypto market cool-off. In terms of distribution by chains, Ethereum led the way with $74 billion (89%) of assets stored on Safe smart accounts, followed by Optimism with $4 billion (5%), and BNB Chain with $2 billion (2%).

Notably, while Optimism accounted for 93% of transactions and 96% of monthly active users in Q2’24, its corresponding share of assets stored in Safes was only 5%. In turn, Safe smart accounts on Ethereum stored 89% of assets in Safes, which are moved less frequently than on Layer-2s.

Qualitative Analysis

Key Developments

Native Swaps, Tiered Fees, and TWAP Orders

Safe has announced the launch of native swaps, a feature that integrates CoW Protocol's intent-based swap mechanism. The launch supports “batched execution while minimizing the risk of errors or expirations often associated with smart account transactions," into the Safe{Wallet} interface. The announcement outlines three key benefits of Native Swaps:

• Robust Security and Price Protection: CowSwap's architecture significantly reduces front-running risks and offers built-in MEV protection, ensuring fair execution of your trades.
• Clear Transactions: Easily understand the details of every swap before execution, presented in a human-readable format.
• Seamless Experience: Enjoy the convenience of swapping tokens without ever leaving your Safe{Wallet}.

Besides the launch of native swaps in Q2’24, Safe also announced the launch of tiered fees and time-weighted average price (TWAP) orders for native swaps.

Scroll Integration

Safe's smart wallet infrastructure has been integrated with Scroll, and both Safe{Wallet} and Safe{Core} are now live on Scroll. The announcement stated that integrating Safe{Wallet} with Scroll aims to provide "essential tools for onchain treasury management, including multisig and advanced account abstraction, streamlining asset management and governance." Safe added that Safe{Core} seeks to offer "a trusted smart contracts framework for building innovative applications on Scroll without sacrificing security."

Launch on X Layer

Safe{Core} and Safe{Wallet} are now live on XLayer, offering developers tools for "asset management and user-friendly applications." Previously, Safe announced it would be integrated with X Layer, allowing X Layer users to "leverage the power of Safe's secure, multi-signature wallets and account abstraction stack to manage digital assets and build apps on X Layer."

Key Governance

SAFE Token Listings and Transferability

Safe has announced that SEP 22 has been executed, resulting in the Safe Token Contract being unpaused and SAFE tokens becoming transferable on April 23, 2024. As of the end of Q2 2024, SAFE token has been listed on KuCoin, OKX, HTX, Coinbase, and Kraken.

Reward Program

Safe has announced that the points of the Safe{Pass} rewards program are live and can be accessed here. Safe{Pass} is a new activity program that aims to reward the most active Safe accounts and ecosystem participants. Rewards are structured in progressive stages and are offered in collaboration with Safe{Pass} launch partners, including EigenLayer, ENS, Euler, Rainbow, Wormhole, and various Safe ecosystem projects like Aarc, Cobo, DeFi Saver, Den, Epoch Protocol, Lore, and Palmera. Safe users can lock SAFE tokens, granting them a multiplier on the points earned through their activities in the Safe{Pass} program.

SAFE DAO Treasury Management Core Unit

This successful proposal entrusted Karpatkey with managing the joint treasury of SafeDAO and GnosisDAO, i.e., support treasury and risk management, governance, and investment strategy. The vote decided to transfer the joint treasury management to Karpatkey and outlined a comprehensive approach to managing the assets. The fee structure for this service is a 2% annual fee on assets under management, payable in monthly installments and calculated based on the joint treasury's value at the end of each month and can be paid in ETH, stablecoins, or SAFE tokens.

Research Series on Ethereum Account Abstraction

This successful proposal requested $30,000 from Safe DAO to fund a three-part research series on Ethereum's account abstraction, specifically focusing on EIPs 3074, 5003, 7377, and RIP 7560. The series aims to provide the Ethereum community with in-depth analyses of these proposals to enhance understanding and facilitate informed discussions. Funding is distributed over a 12-week period following completion of project milestones.

The research involves data collection, literature reviews, and stakeholder interviews, followed by detailed analysis and report drafting. Each month focuses on different EIPs, culminating in peer-reviewed publications. The proposed timeline is structured into four-week cycles covering initiation, data collection, drafting, and publication. No upfront funding is required, aligning with SafeDAO’s payment terms for substantial projects.

Key Events

Multis Acquisition

Safe has announced the strategic acquisition of Multis, "an all-in-one financial software designed for crypto businesses." According to the announcement, the acquisition will help Safe "solve the complexities of cross-chain interaction through network abstraction, with the end goal of enabling users to manage assets across diverse blockchain networks effortlessly." The Multis senior leadership team joined the Safe Ecosystem Foundation, and former Multis CEO Thibaut Sahaghian will serve as the Safe Core Team's Network Abstraction Lead.

Closing Summary

While most smart contract wallets have struggled to find mainstream adoption, Safe has continued to be an exception. As the leading smart contract wallet system, Safe stored over $83 billion worth of assets in its smart contract wallets.

Safe witnessed an all-time high in most usage metrics in Q2’24. Safe users continued to derive value from the core wallet product, with 2.7 million monthly active accounts in Q2’24 (up 67% QoQ) across Safe’s multiple deployments on 15+ networks. Simultaneously, the overall share of transactions originating from Safe smart accounts reached 2.7% in Q2’24 (up from 2.3% in Q1’24). Wallet infrastructure aggregators such as Safe are expected to benefit from an influx of new crypto applications.

While Optimism accounted for 93% of transactions and 96% of MAUs in Q2’24, its corresponding share of assets stored in Safes ($83 billion as of Q2) was 5%; in turn, Safe smart accounts on Ethereum stored 89% of all assets, which are moved less frequently.

The Safe community voted in favor of making the SAFE token transferable as of April 23, 2024. Simultaneously, a successful proposal introduced strategies to enhance the utility of the SAFE token by linking ecosystem activity to token utility. In Q2’24, Safe announced the launch of native swaps, as well as tiered fees and time-weighted average price (TWAP) orders for native swaps.