What Is Gnosis Safe? | CoinCodex

Safe (formerly known as Gnosis Safe) is one of the most compelling wallet options for users of Ethereum and similar blockchain networks. In this article, we’ll explain what the Safe wallet is and how it can provide additional security to the crypto holdings of organizations and individuals. 

What is Safe (Gnosis Safe)?

Safe (formerly known as Gnosis Safe) is a smart contract based multi-signature wallet available on a variety of blockchain networks. Before a transaction can be made with the Safe wallet, a minimum number of users must approve the transaction first. For example, a Safe wallet controlled by 5 key holders can be set up to require a minimum of 3 signatures to approve a transaction. 

Safe is a very popular option among crypto businesses as well as DAOs (decentralized autonomous organizations). According to data by the project, Safe accounts have handled around 20 million transactions so far and currently secure $45 billion worth of crypto assets. 

The wallet can be used with ETH or tokens that adhere to the ERC-20 standard, and supports a wide variety of Ethereum-compatible blockchains. Some example of blockchains that Safe can be used on include:

The two types of accounts on Ethereum

To understand what makes Safe different from an Ethereum wallet such as MetaMask on a fundamental level, we need to understand the two types of accounts on Ethereum.

Externally Owned Account (EOA)

In Ethereum, an Externally Owned Account or EOA is an account that is controlled by a private key. An EOA can initiate transactions and pay gas fees, but has no code associated with it. When you use a wallet such as MetaMask to generate an Ethereum account, it’s an EOA. 

Contract account

A contract account is an account that exists as a smart contract, and is controlled with code instead of a private key. Contract accounts can send transactions, but only when “prompted” to do so by a transaction from an EOA. Contract accounts can execute arbitrary logic, which means they can be used to implement a multi-signature scheme or other utilities. When you create a wallet with Safe, it’s an example of a contract account. 

Contract accounts will likely become the default in the future

Currently, the Ethereum protocol considers EOAs as the default type of account. However, Ethereum developers are currently working on introducing account abstraction, which would make contract accounts the default type of account. This change is poised to make Ethereum much more user-friendly as it would mean users wouldn’t necessarily need to use private keys to interact with Ethereum. 

This is of course a very surface-level explanation of how accounts work in the context of Ethereum. If you want to learn more about this subject and the ongoing efforts to introduce account transaction into the Ethereum protocol, we recommend you read this helpful article published by MetaMask. 

What can a Safe wallet do?

As a smart contract wallet, Safe can be used to setup a multi-sig wallet on a variety of EVM-compatible blockchain platforms. 

In addition to specifying the number of signatures required to approve a transaction from the wallet, a Safe wallet can also include spending limits and organizational hierarchies. Wallets created through Safe can also be used to schedule transactions or send transactions in batches. 

When it comes to multi-sig wallets such as Safe, we usually associate them with crypto businesses or DAOs where transactions using the organization’s crypto holdings must be approved by multiple individuals. 

However, it’s also possible to use a multi-sig wallet as an individual to enhance the security of your crypto holdings. For example, you could setup a 2-of-3 multi-sig wallet for yourself, which would require 2 private keys to approve a transaction. 

In this way, you could split your private key backup in three separate locations, mitigating the risk of losing a backup or having it stolen. Even if one of the backups was stolen, that wouldn’t be enough to actually steal your crypto since at least one more private key would be required to approve any transaction. If you combine a multi-sig wallet with highly durable metal crypto wallet backups, you can achieve a very high degree of security.

In order to create a Safe wallet, you can go to the interface at app.safe.global, select “Create new Account” and follow the provided instructions. Please keep in mind that you’ll need to connect an existing Ethereum wallet you control in order to pay the network fees associated with creating a wallet with Safe.

Afer your Safe account is set up, you’ll be able confirm and execute transactions by using a hardware crypto wallet, or use a software Ethereum wallet such as MetaMask, Rainbow or Coinbase Wallet. 

The bottom line

Safe is a great option for cryptocurrency businesses, DAOs or individuals that are looking to protect their crypto with a more sophisticated setup. However, if you’re just looking for a simple Ethereum wallet and don’t want to deal with the added complexity of a multi-sig wallet, Safe is probably not the best choice for you. 

For most users, an Ethereum wallet such as MetaMask or Coinbase wallet will be a more convenient option. Check out our MetaMask vs. Coinbase Wallet article to learn more.