Safe airdrop is coming soon, explaining the status quo of the DAO fund management tool industry in detail

Original Title: "DAO Fund Management Tool Industry Analysis"

Original Author: Gu Wenjun, Bixin Ventures

1. Introduction

Currently DAO funds management generally adopts the method of multi-signature wallet, that is, before executing a transaction, multiple accounts need to be confirmed before it can be executed. Compared with an account controlled by a single private key, once the private key is stolen, the funds in the account will be at risk. The fund management method of the multi-signature wallet has higher security, supports more complex transaction logic, and has strong scalability.

Security: Allows adding multiple signature accounts, and the execution of the transaction needs to be confirmed by multiple accounts.

Support more complex transaction logic: For example, allowing batch transactions, multiple simple transaction merge execution, users only need to sign a Batch transactions are fine.

Extensibility of functions:Users can add multiple modules with different functions, such as social recovery modules (used in specific environment to restore access to Gnosis Safe), Allowance Modules (Allowance Modules with limited execution permissions).

2. Development stage 

The current main projects in the DAO fund management industry are: Gnosis Safe, Multis, Coinshift, Parcel, Llama, among which Gnosis Safe is currently the largest DAO fund management tool and is developed for the industry Providers provide support for building platforms, technical documents, tutorials, and funds. Among them, Multis, Coinshift, and Parcel are built using the Gnosis safe platform. Among the multi-signature fund management tools built on the Gnosis platform, Coinshift has received investment from Sequoia Capital. The current fund size is 1.675 billion US dollars. It has use cases such as Aave and Gitcoin, with a total expenditure of more than 36 million and 247 Safe accounts.

The development stage of the research here is mainly based on the ratio of the number of accounts and asset size using this multi-signature management tool to the entire market. Since Multis, Coinshift, and Parcel all use Gnosis Safe as the development platform, the number of accounts and fund management scale counted are included in Gnosis Safe.

1) Judging the stage according to the ratio of the number of organizational accounts to the number of individual accounts

According to Dune Analytics data, as of July 18, 2022, the total number of Safe accounts established on Gnosis is 78,300, and the number of accounts on Aragon is about 1,900, totaling about 47,500.

According to Crypto.com, as of July 30, 2021, the number of cryptocurrency users worldwide has reached 221 million. The proportion of 78,300 accounts is only 0.035%, because multi-signature is generally used in organizations. Therefore, we consider 78,300 accounts to be organizational accounts.

Based on the analogy between China's population and the number of enterprises, China's total population in 2020 is about 1.4 billion. According to the "2020 China Enterprise Development Data Annual Report", as of 2020 In 2019, there are currently 140 million active/surviving market entities in my country, accounting for about 10% of the total population.

Taking the United States as an example again, according to the statistics of the US Small Business Administration (SBA) in 2019, the number of enterprises in the United States is about 30.73 million The population is about 324 million, and the number of enterprises accounts for 9.48% of the total population.

Due to the different national conditions in China, the United States and the world, the number of accounts per capita and the average number of accounts of enterprises are different. Here, it is assumed that one person only opens one bank account. If an enterprise (market entity) only opens one bank account, then the enterprise account accounts for 10% (China) and 9.48% (the United States) of personal accounts.

Therefore, the current 0.035% organization accounts account for about 10% of traditional organizations account for individual accounts, DAO fund management industry is still in a very Early stages.

2) Judging the position based on the asset scale in the total crypto market Development stage

According to Boardroom.info data, the total amount of funds in DAO is 7.47 billion US dollars (as of July 18, 2022), accounting for 1% of the total market value Trillion dollars (according to Coingecko) is only 0.74%. From the perspective of asset ratio, DAO fund management industry is still in the early stage of industry development.

3. Industry pain points 

The management tools of DAO funds are crucial to the development of DAO projects, and currently there are the following pain points:

1) Security

Currently the most used accounts are external accounts EOAs (Externally Owned Accounts). It is characterized by the use of a single private key for encryption. Once the private key of the account is controlled by others, it will control the ownership of the account. Currently, MetaMask or Imtoken on the market are simple EOA, including various hardware wallets. However, most of today's assets are stored in external accounts, which has certain security risks.

2) Transparency in the process of asset allocation and expenditure

Since the DAO treasury holds more Many projects hold more than 50% of their own project Token, and some even exceed 80%. These Tokens are the funds for project operations, which are used for the payment of personnel salaries, supplier payments and other expenses. Therefore, it is necessary for the project party to regularly evaluate the amount of DAO funds used for the minimum benchmark expenditure and the expenditure budget for a period of time in the future. At the same time, it should Make sure that there is enough stablecoin ratio in the DAO treasury to cover these necessary expenses, such as personnel salaries, operating expenses, etc.

However, in different phases of bull and bear, Token prices may have huge differences. Since the Tokens in the treasury are the funds of the project, the Token prices will be severely affected It will affect the short-term development of the project, and even seriously, there will be a risk that the cash flow will be broken and the project will be suspended or stopped directly. Therefore, DAO's fund management tools need to reflect transparency in the process of asset allocation and expenditure, so that managers can clearly see the financial status and risk level of the project.

4. Solution 

1) Smart contract account + multi-signature Wallet

Another type of account on Ethereum is a smart contract account. The characteristic of this type of account is that each smart contract account has a unique Ethereum public address , The difference with EOAs accounts is that it does not use private keys, but uses blockchain smart contracts to agree on what logical conditions are met to perform corresponding actions, such as the regulation of access rights, the logic of executing transactions, and so on.

The multi-signature wallet is based on the smart contract account, and establishes a DAO fund management solution that is authorized by multiple accounts to perform certain actions . This fund management solution also supports complex logic, and can set certain specific access rights, transaction execution conditions, etc.

Of course, taking the solution of smart contract account + multi-signature wallet as an example, even Gnosis Safe, the fund management tool chosen by most projects, is still in December 2021. There were security incidents in the month. This incident is likely to be a phishing attack by the hacker team targeting users of the Gnosis Safe Multi-Sig application. The normal logical contract 0x34cfac64 is the official address of Gnosis Safe. The attacker hardcoded this address in the malicious contract, so this A series of operations are applicable to users who attack all Gnosis Safe Multi-sig applications, and there may be other victims of this attack.

2) Optimize product functions to increase DAO capital inflow and outflow Transparency

Many projects use various methods to improve the transparency of DAO funds, such as:

1: Llama provides a mechanism for categorizing incoming and outgoing funds and tying outgoing funds to related proposals.

2: Parcel and Multisafe support one-click large-scale payment of ETH or ERC-20 Token, through 4 ways: CSV import, regular payment, membership Spending limits, dashboards to express current asset allocation.

3: Multis optimizes the UI interface to make the design more user-friendly Using the customary function expression, the function interface is divided into: Dashboard, Transactions, Balances, Wallets, Contacts and other functions, and Multisafe sets the functions to Home, People, Assets, Transactions and other functions. Increased transparency in the asset allocation and disbursement process.

5. Potential and scale 

The main measurement of DAO fund management tools The indicator is the size of funds, so here we mainly use the amount of funds stored in the multi-signature wallet to analyze and speculate on the future potential and scale of the fund management tool industry. According to Boardroom.info, as of July 18, 2022, the total size of funds in DAOs is $7.47 billion, accounting for 0.74% of the $1 trillion in the entire crypto market.

Assuming that the funds stored using DAO fund management tools account for 5%, 10%, and 15% of the total encryption market, in the three cases, Compared with the current total capital, the growth potential of DAO fund management tools is 569.3%, 1238%, and 1908%, respectively.

6. Technical route

At present, there are three main technical routes, DAO Most of the funds are stored using the third solution, namely smart contract account + multi-signature wallet.

1) External Account EOAs 

Externally Owned Accounts (Externally Owned Accounts) refers to only A blockchain account controlled by a single pair of public and private keys, currently about 96% of funds are stored in external accounts. The external account uses a set of common private keys to bind the ownership of the account, which is the mapping of the real world in the blockchain industry, similar to our bank card account.

Because the Codehash of the external account is empty, it can also be judged by Codehash, for example:

The key file is stored in the data directory (datadir points to or the default directory), the corresponding directory is keystore, and the private key file has been passed It is encrypted and stored in this directory. The key file is a text file in JSON format, which can be opened and viewed with a text editor. The format is as follows:

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The keystore contains the address corresponding to this secret key and some information related to encryption, including account address address, encryption algorithm cipher, encrypted plaintext ciphertext, etc., the client reads the key file and The password is encrypted, the private key is decrypted, and the private key is used to sign the transaction sent.

The characteristics of external accounts are as follows:

1) There is an account balance 

2) Controlled by private key 

3) Can send transactions (transfer and collection)

4) No associated code 

2) Smart contract account

contract account It is an account controlled by code. The account address is generated when the smart contract is created. The transaction of the contract account is not controlled by a private key, but the contract code is triggered by the transaction or other smart contract calls to generate related transactions.

Only the contract account has code, which stores codeHash (the hash value of the Ethereum virtual machine code of this account). This field is immutable after generation, which means that the smart contract code is immutable. An account in Ethereum consists of four fields: a nonce, the balance of the account, the contract code (if any), and storage (usually empty). External accounts can trigger transactions, while contract accounts cannot actively initiate transactions, and can only be executed according to pre-written smart contract codes after being triggered.

Comparison between contract accounts and external accounts:

The relevant characteristics of contract accounts are as follows:< /p>

1) Have an account balance 

2) Can generate transactions 

3) Associated contract code 

4) Through transactions or other contract calls Trigger contract code execution 

3) Smart contract account + multi-signature wallet

Multiple A multisign wallet is essentially a smart contract account, which requires multiple users to sign and authorize the smart contract to perform related operations, including single-person transfers, batch payments, etc.

A simple example is: there is an existing contract account, which requires a transfer to be signed by the person who initiated the transfer (Alice) and another person (Charles). Therefore, when Alice transfers 20 ETH to Bob through this contract, the contract will notify Charles to sign, and after he signs, Bob can receive the 20 ETH (see the figure below).

Signature process

Ordered multi-signature, the order of signatures between signers is a serial order

Broadcast multi-signature

The order of signatures between signers is a parallel order without interfering with each other 

7. Competition pattern

At present, the main projects on the market that provide DAO fund management services are: Gnosis Safe (including fund management platforms built on its platform, such as Multis, Coinshift, Parcel, etc.), Aragon, Compound Governor, Daohaus, Substrate.DAO Although the building platform mainly provides DAO building services, it also has the function of DAO fund storage.

This report mainly focuses on the scale of fund storage and potential DAO participants (Members) To measure the competitive landscape of the industry, potential DAO participants refer to users who may participate in the DAO governance process in the future that the platform can touch. link).

1) Storage of DAO funds Scale and Caliber 

2) Potential DAO participants ( Members) Caliber

8. Concentration 

1) As of July 18, 2022, according to the data of DeepDAO, Boardroom, and Tally, the top four fund management platforms are: : Gnosis Safe, Substrate, Compound Governor, Aragon, the corresponding storage funds are: 987.2 million US dollars, 313 million US dollars, 163.1 million US dollars, 147.5 million US dollars, and the market shares of the four projects are: 61%, 19.4% %, 10.1%, 9.1%, so CR4=99.6%. According to Bain Consulting's market structure classification, 99.6% of CR4's market structure belongs to oligopoly type I.

2) If the statistics are based on DAO Active Members, The first four fund management platforms are: Compound Governor, Gnosis Safe, Substrate, and Aragon. The corresponding numbers of Dao Active Members are: 2,400, 1,600, 25, and 9. The market shares of the four projects are respectively : 59.5%%, 39.6%, 0.6%, 0.2%, so CR4=99.9%, also belongs to type I oligopoly.

9. Barriers 

1) Conversion cost 

Once a DAO project chooses a fund management tool, unless there are serious problems, such as security issues, functions that cannot meet the needs, etc., under normal circumstances, it will not be replaced or replaced for the following reasons It will not be replaced frequently:

1: Some fund management tools will expand their functions horizontally, adding functions built by DAO on the basis of fund management functions, such as Gnosis Safe also has the function of DAO construction. Although the function is inferior to projects that focus on building functions, it can still provide a one-stop solution to increase the attractiveness and stickiness of the project party and reduce the project party’s replacement funds. The probability of managing the platform.

2: I have had a certain run-in with the fund management tools, and I have reached a certain level of proficiency in operation. After replacing other fund management tools, I still need to There is a certain learning cost for learning and exploring from scratch.

3: The new fund management tools have not passed the test of time, and project managers have doubts about the safety of funds.

2) Brand/Word of Mouth

There is a rule that the stronger is stronger in the fund management tool industry , that is, the more funds a tool manages and the longer it operates, the safety and stability of the tool will be proven, so as to establish a safe and reliable image among the project party group and form a brand/word of mouth. New money management tools take an equally long time to prove their reliability.

10. Development driving factors 

The development of the DAO fund management tool industry consists of the following Driven by several factors:

· The trend of users migrating assets from external accounts to smart contract accounts due to security requirements

When more and more hacking incidents targeting external accounts (EOAs) occur, resulting in a large loss of user assets, people are aware of external accounts Relying on a single private key to ensure security is unreliable, thus considering the use of smart contract accounts authorized by multiple users to avoid the risk of financial loss caused by the leakage of a single private key to a certain extent.

· The number of organizations adopting the governance model of DAO

Another factor affecting the development of the DAO fund management platform industry is the adoption trend of the DAO governance model, that is, the number of DAOs. The larger the number of DAOs, the larger the amount of funds in the corresponding DAOs, and the smaller the number of DAOs, the smaller the amount of funds in the corresponding DAOs.

11. Project core competition elements 

1) Security

Security is a basic requirement for a DAO treasury management tool. In July 2017, the multi-signature wallet Parity founded by Polkadot founder and former Ethereum CTO Gavin Woods was attacked by hackers. It was confirmed that 153,000 ETH (worth about 30 million U.S. dollars) were stolen. After signing the wallet, it disappeared. It can be seen that once a major security problem occurs in the multi-signature wallet, it will have a serious impact on the later development of the project. Therefore, security is the lifeline.

2) Product function 

DAO funds are different from personal funds and serve operating organizations, similar to corporate bank accounts in our traditional world, in terms of payment process, capital efficiency evaluation, payment efficiency, payment transparency, etc. There are obvious differences from personal use, so DAO fund management tools are required to be closer to the needs of users in product design.

12. Major risk points 

1) Security 

The main risk point of the DAO fund management tool industry comes from security. Once a serious security incident occurs, it is likely to cause a devastating blow to the project, which also reflects the A weakness of this segment is the lack of fault tolerance.

13. Introduction to main projects 

1) Gonsis Safe

1”Introduction 

Gnosis was founded in 2015, and its early positioning was Predict the market. After several years of development, it is currently not only a fund management tool (multi-signature wallet), but also a side chain of Ethereum after merging with XDAI, which carries funds by building a dedicated chain. As the largest management platform for DAO fund storage, Gnosis Safe is also positioned as an open platform for other projects to build their fund management solutions, such as Multis, Coinshift, Parcel, etc. The currently deployed chains include Ethereum, XDAI, Energy Web Chain, Polygon, BSC, and Arbitrum, forming a multi-chain deployment situation and promoting the Gnosis chain to be adopted by more applications.

2" brief history 

Founded on Ethereum in 2015, positioning it as a prediction market 

In December 2018, released the ecological development fund plan 

In the second quarter of 2019, the DxDAO platform was launched, and the DutchX auction agreement was deployed 

In the fourth quarter of 2019 The Gnosis Safe Multisig multi-signature wallet was launched in the quarter 

In December 2020, the Gnosis Custom Market Maker market maker tool was released 

March 2021, Release SafeSnap, a suite of decentralized governance tools   

In May 2021, the multi-chain plan will be released 

In November 2021, it will be merged with the Ethereum side chain Xdai into Gnosis Chain

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In July 2022, Gnosis Safe announced the completion of US$100 million in financing and changed its name to Safe

3” Token  

BlockBeats previously reported that Gnosis Safe will be split from Gnosis Ltd. and SafeDAO will be established , and manage the Gnosis Safe ecosystem and infrastructure by issuing SAFE Token. The total amount of SAFE is fixed at 1 billion pieces, minted by the SAFE Foundation. Lukas Schor, co-founder of Gnosis Safe, posted on social media that Multi-signature wallet Gnosis Safe has completed the Token airdrop snapshots to historical users, but did not disclose The specific block height of the snapshot.

Safe Token Economic Model

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Safe launched the Guardian Program at the same time, and will distribute 50,000,000 SAFE Tokens (accounting for 5% of the total supply) as rewards to Safe contributors. A Guardian is any active member of the community who has made an active contribution to the Safe ecosystem. The first batch of Safe Guardians will be allocated 25 million SAFE Tokens retrospectively. 50% of the 25 million SAFEs can be claimed immediately, and the other half will be released within 4 years.

SafeDAO guardian Token distribution ratio

4" Team

Co-founder:Martin Kppelmann, an entrepreneur and thinker in the blockchain field, co-founded the decentralized Gnosis prediction market, and has done a decentralized market-driven governance mechanism. In addition to entrepreneurial activities, Martin also uses state channels (state channels) examines the economic incentive structures of different consensus mechanisms and scalability solutions, and Martin co-hosts Ethereum meetup groups in Silicon Valley and San Francisco. Martin is known for his work and research on Basic Income on the Blockchain: Circles.

Co-founder: Stefan George, an entrepreneur and developer, came into contact with Bitcoin in 2013 and was impressed by it interest. Stefan has worked in tech companies in Silicon Valley and startups in Berlin. After completing a master's degree in computer science, he traveled to Asia for a year in 2014 before starting work on Gnosis in Berlin. Stefan led the development of Gnosis and implemented the smart contracts behind the prediction market platform.

COO:Dr. Friederike Ernst, a physicist, received his Ph. Stanford University has done basic research for many years, and Friederike has also worked part-time as an encryption technology expert for many years. Now runs the company full-time at Gnosis. Additionally, she is the Secretary General of the German Blockchain Association, a leading think tank for blockchain policy in Germany.

Advisor: Joseph Lubin, co-founder of Ethereum. Jeremy Millar, Chief of Staff at ConsenSys. Ledger Partners, originally part of Oracle's first Java Architects.

5" community size 

Twitter's The number of followers: 40k people, the number of followers on Discord: 6.2k people

6" financing 

In July 2022, Gnosis Safe completed a financing of US$100 million. This round of financing was led by 1kx, Tiger Global, IOSG Ventures, A&T Capital, LongHash Ventures, Coinbase Ventures, A total of 42 institutions and 22 industry experts including Blockchain Capital, Digital Currency Group, ParaFi, Lightspeed, Fenbushi Capital, Bixin Ventures, GSR, Polygon, and ConsenSys participated in the investment. This round of financing and extensive strategic cooperation aims to help Safe The development of an ecosystem of apps and wallet tools based on accounts is an important milestone in Safe's evolution into a programmable ownership platform.

Participating institutions

Participating in industry experts

7" Operation Data

As of July 18, 2022, Gnosis The total fund storage of Safe is 39.56 billion USD (including DAO funds and individual funds), the number of Safes (accounts) created is 78,547, and the total number of transactions is 419,019.

The total amount of funds stored in Gnosis Safe is cut off July 19, 2022 Source: Dune Analytics

Total transaction volume in Gnosis Safe as of July 19, 2022 Source: Dune Analytics

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Note: Search for "SAFE" through Etherscan, and you can find the SAFE contract address with the blue certification logo. The address marked as "Safe Foundation" by Etherscan has been deployed for mainnet testing since April 20, 2022 09:55:55 PM + UTC.

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