If you were ever thinking of starting your own DAO, an important question driven by your group would be wen multi-sig?
Multi-signature wallets have become critical infrastructure for the DAO movement securing billions of dollars in treasuries & facilitating capital/operational payment flows for thousands of communities globally in a democratized manner. The psychological & on chain safety provided by the humble multi-sig to overstrained DAO operators is immeasurable.
However as communities continue to push the frontier of borderless coordination, the operational processes become complex. What had been a couple of signers coordinating capital through a multi-sig for a DAO has now turned into a multitude of stakeholder demands arising from a growing community.
DAOs have employed a hierarchy of either working groups or nests to tackle multiple internal roles (eg. development, growth, legal) in a decentralized manner which is optimal for retaining operational talent. These working groups (WGs) may also be provided with their operational multisigs & budgets provided at request to fuel autonomy towards their goals.
When DAOs look to run multiple multi-sigs for WGs, the shortcoming of the simple multi-sig structure is that it does not support a degree of control that DAOs would like to have, especially in the following conditions:
- If the working group leads are relatively untested
- An active layer of security to prevent WGs from going rogue & protecting the DAO from losses & consequent legal fallouts
Another major question would be how to prevent collusion of certain signers within the WG multi-sig if EOAs were the only way to sign through the WG multi-sig.
How do you facilitate a level of on-chain autonomy while having a stopgap to prevent signer malfeasance ?
This is where nested safes come in
What are Nested Safes ?
Nested safes (or multi-sigs) allow for an abstraction layer where other safes can act as a signer along with a person signing through an EOA (personal wallet)
You can have multiple safes or multiple people act as signers for a nested safe.
Imagine a joint bank account where one of the signers is another corporate account along with you and your partner.
This structure of decision making is enabled with nested safes.
Say that the community would like to have a new WG operate within the DAO, the WG can operate under the oversight of a WG lead as a signer & the DAO operators through the parent safe as the other signer. It formalizes an on-chain workflow between these 2 entities. Other WG safes or leads (EOAs) can join in as a signer if necessary. The nested safe structure is very flexible that way.
Benefits for a DAO Operator
The nested safe structure allows the DAO to participate in the WG or subDAO transaction workflow simplifying the oversight process of the WGs within the organizational hierarchy.
This also provides a layer of protection for DAO operators from personal liability as they can now work under the umbrella of the DAO parent safe & still be able to maintain oversight of WG budget flows wherever necessary
It also enables transparent reporting to the community through a single source of truth rather than key transaction context being scattered across certain signers in multiple WGs disparately.
Another benefit is that it eliminates the delay of transaction coordination among mulitple WGs especially in the event of certain signers being unavailable at the time of approval or execution.
Providing Granular Control for Scalable DAO Operations through Parcel Nested Safes
Parcel has created the Nested Safe Interface for DAOs who have adopted this structure wherein DAO operators can participate in transaction workflows through the parent/DAO safe without having to personally sign in through multiple WG or subDAO safes
Operators using the Gnosis Safe interface had to sign in through Wallet Connect for each WG safe before each approval. Imagine the hassle of doing that for multiple WGs. As expected, this created a lot of confusion among operators & even lead to the mistake of duplicated transactions through the safe.
Parcel simplifies this by skipping the Wallet Connect sign in process for every nested safe & allows you to approve nested safe transactions through the platform.
Through Parcel Nested Safes, you can
- seamlessly toggle between those key nested safes within our Transactions tab in the sidebar.
- view a segregated context rich transaction history of each nested safe under that respective tab
- & perform your signer duties on multiple DAOs with smooth transaction workflows on the Parcel interface.
This eliminates the redundant & messy sign in processes across multiple safes. Parcel makes it easier to operate these safes by providing a clear & informative overview of nested safe transactions boosting transparency for all signers within the safe. The user experience of the transaction workflow is simplified for the operator allowing for seamless oversight of these groups within the DAO.
Further Use Cases
The beauty of the nested safe structure is that it facilitates governance of funds between different groups transparently through Parcel.
Example; DAOs could use the nested safe structure as a training wheels setup for emergent subDAOs by being a signer in the tx workflow & involving other WGs as signers. This provides a level of autonomy for WG leads to execute their budgets without direct involvement of the DAO operators in the safe.
This structure can be maintained till the WG or subDAO can prove their capabilities for complete autonomy.
Cross Guild Collaboration: Say that you have a couple of guilds looking to collaborate on a certain project, you can have joint control & operation of the budget with full transparency for each entity.
All facilitated through Parcel Nested Safes.
DAOs have the potential to be limitless scalable organizations & the ability to enforce a layer of control to facilitate greater experimentation & working group autonomy has never been more seamless with the arrival of Parcel Nested Safes.
(P.S: A massive shout out to Alisha, Coltron, Slobo, Validator.Eth etc over at ENS for their patient feedback & time while iterating this feature for their operations)