karpatkey appreciates the thoughtful proposal by @Christoph and @Andre. Introducing a community-aligned revenue stream is an essential first step towards SafeDAO’s economic sustainability and overall ecosystem growth.
We have structured our feedback along 3 themes.
Theme 1: Native Swap implementation
karpatkey is excited to see the success of a joint initiative between two thriving products that spun out of the Gnosis ecosystem - Safe and CoWSwap. We have been serving and partnering with both for a long time and are proud to continue to do so.
We believe the Native Swap revenue implementation is a natural and healthy first step to take, as users in the space have proved willing to pay for swapping assets. Furthermore, Native Swaps and TWAP Orders in the context of Safe’s positioning are value-added as they offer convenience, enhanced security and a smoother execution experience in general.
It is also important to note that the implemented pricing is competitive compared to peers in both the individual user segment (~0.8-0.9% across MetaMask, Zerion and Rainbow) and the institutional custody segment (~0.2% outgoing tx fee for Fireblocks basic package).
Other use cases meet existing onchain needs in a way that has strong potential for monetisation. Building widgets around them can further leverage Safe’s role as the default infrastructure for managing assets on-chain. Examples we see as high potential include:
- Recurring payments
- Yield generation and staking
- On/off-ramp solutions
karpatkey is committed to support the SEF and other stakeholders in the further exploration and implementation of the above identified value-accrual avenues.
Analysing onchain data could unveil other such examples.
Theme 2: Fee conversion
karpatkey serves as Treasury Manager for leading DAOs across the ecosystem, and that extensive experience has shown us the challenges faced by treasuries composed solely of a project’s native token. We believe the Native Swap implementation presents a unique opportunity for SafeDAO to gradually and seamlessly diversify its holdings. In this context, we recommend converting all generated fees into stablecoins if feasible at this time.
Considering the cyclical nature of the Crypto market, the current fee implementation has the highest potential to generate revenue during increased trading activity, market euphoria, and inflated valuations. Accumulating stablecoins during these times, instead of buying back SAFE tokens, would enable SafeDAO to build a strong war chest that can be further grown through onchain yield. Those resources can then be leveraged to execute strategically timed buybacks of the SAFE token in periods of market weakness and suppressed valuations.
In case legal, operational or technical constraints prevent the implementation of the recommended adjustment to the fee conversion at this time, we recommend that this measure be implemented as a future improvement. karpatkey, wherever applicable, would readily support the SEF in overcoming any pending constraints.
Theme 3: The future
As outlined, this proposal is an essential first step. In addition, we see three Important opportunities to evolve the value capture mechanism to solidify Safe’s leadership and central role in the onchain ecosystem. We are excited to collaborate with the SEF and other stakeholders to develop those further:
Firstly, extending this model to Safe’s vibrant ecosystem of front-end applications and other partner integrations presents an enormous opportunity. More specifically, we see a future where the front-end, which originates a tx, captures part of the revenue while another part is relayed to the DAO. Such a direct approach is superior to capturing all income in the DAO and then designing complex, high-friction, and often unnecessarily political processes for the DAO to support front-end builders and return value to them. A16Z’s recent piece on monetisation also provides support for this direction.
Secondly, in alignment with the industry’s ethos, we would love to explore reducing reliance on wet code and legacy structures by bringing more of the logic of such partnerships onchain. To provide more specific ideas here, we need to better understand the current license model. However, we firmly believe such a pursuit would be impactful for the entire industry, and Safe is well-positioned to be a pioneer.
Finally, there are interesting long-term implications worth considering. With the success of Safe and this revenue model, the number of partners interested in becoming the “default” widget for a given action (e.g. swap/stake/earn/bridge) will grow. This will create a need for a curation mechanism that is not reliant on central decision-making. Forum-based governance is poorly suited for serving such specific tasks. We believe there will be an opportunity for “token curated registries” where SAFE holders can stake or re-stake their tokens towards securing specific implementations in exchange for a share of the revenue such implementations generate. This presents a powerful mechanism to return value directly to token holders at scale.
Conclusion:
As Treasury Manager and strategic partner to the Joint Treasury (JT) of GnosisDAO and SafeDAO, karpatkey remains committed to supporting the SEF in driving the implementation of this proposal and the avenues for Safe’s financial sustainability it opens. We are excited to engage with the community on these initiatives.