Despite tremendous growth over the past decade, the crypto market still lags in some fundamental factors. One of the major challenges in this burgeoning niche is the security of digital assets stored in Decentralized Finance (DeFi) protocols. According to the latest Cipher Trace report, DeFi-related fraud accounted for 54% of the total crypto fraud during the first half of 2021. Notably, this figure was up 3% compared to the 2020 statistics.
While it is evident that DeFi has become a hotbed for fraudsters, some innovations are working round the clock to enhance the security of decentralized markets. On this front, we have smart contract wallets such as Gnosis safe which runs on the Ethereum blockchain. Gnosis safe introduces a multi-sig wallet service, enabling multiple stakeholders or DAOs to efficiently manage their wallets.
At its core, Gnosis Safe provides an avenue for DAOs to run their treasuries while avoiding a single point of failure. This smart contract wallet features functionalities that allow users to customize how they manage their crypto assets; stakeholders can integrate settings that require a predefined number of signatures to authorize transactions. Firms and DAOs can protect their underlying funds by requiring multiple team members to confirm transactions.
Given its value proposition, Gnosis Safe has gained traction amongst DAOs which are tasked with operations, including making payments to vendors, employees or other DAOs. This value has since trickled down to other crypto niches such as DEXs, with Avalanche-based Pangolin exchange being the latest project to go live on Gnosis Safe.
Avalanche DEX Pangolin Goes Live on Gnosis Safe
Pangolin, a pioneer DEX on the Avalanche ecosystem, announced on January 5th that DAOs can now seamlessly manage their funds following an integration with Gnosis Safe. The DEX, which focuses on a community-driven approach features an Automated Market Maker (AMM) model, allowing traders on Avalanche to exchange available digital assets with a cheaper and faster transaction finality.
With Gnosis Safe in the picture, the Pangolin DEX is optimistic of attracting more liquidity especially from DAOs which were previously limited by the lack of a multi-sig wallet functionality.
“Pangolin now makes it simple and secure for DAOs to manage their treasury funds.” read the announcement.
Before this integration, DAOs looking to leverage the Pangolin DEX had through a cumbersome process to transfer funds. They had to rely on a single hot wallet and multiple transactions before the funds could reach the intended parties. While the approach served its purpose, DAOs using the Pangolin DEX were exposed to a single point of failure or fraud by the entrusted party.
Thanks to this integration, Pangolin noted that DAOs will now be able to carry out several operations, including payments to vendors or other third parties by leveraging the Gnosis Safe smart contract wallet. Simply put, the multi-sig function eliminates the need to transfer funds into a single wallet; instead, payments can be made directly via the Pangolin DEX.
“Multi-sig swaps funds within Gnosis via Pangolin and sends payment directly to vendor, employee, or DAO in their preferred currency. No single person needs to take control of the funds to accomplish payment.” further explains the blog.
In addition to making payments, it will be much simpler for DAOs to allocate funds towards Pangolin’s liquidity mining pools. The project has set aside 95% of its native token PNG (512 million tokens) towards liquidity mining incentives.
Looking Into the Future
It seems like just the other day when DAOs became a major trend in the crypto ecosystem. Today, the possibilities are endless, from running decentralized funds to exchanges such as the Pangolin DEX. As the ecosystem becomes more decentralized, it is evident that more projects will likely pivot to DAO-governed models.
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Going by this trend, stakeholders in the crypto industry have to come up with solutions that enable multiple users to run a single wallet. This is already in play through smart contract wallets like Gnosis Safe which appears to be attracting some of the largest DAO-run treasuries. The latest integration with Pangolin is a big boost to both projects given the potential in DeFi-oriented platforms especially Avalanche, which touts over $11.5 billion in total value locked (TVL) as of press time.