How does a Safe multisig account work?

A smart account, not a key

A Safe is a smart account: an account run by smart contract code, not by one private key.¹ The Safe has no private key of its own.² Its code decides who may move funds, how, and under which conditions.¹

You cannot tell a smart account from a key-controlled one just by looking at its address.¹ It can receive funds like any account, but it cannot start a transaction by itself.¹

Safe's documentation separates two things. Safe Smart Account is the contract code on the chain.³ Safe{Wallet} is the official app that people use to work with it.³ Lesson 6 shows why that difference matters.

Owners and a threshold

Each Safe keeps its own list of owners.² An owner can be an ordinary key-controlled account, another smart account, or even a passkey.¹

A Safe also stores a threshold: the least number of owners who must confirm a transaction before it runs.² It can have any number of owners. The threshold can be anything from one up to the total number of owners.²

Owners can add or remove other owners, and change the threshold.² Each of these changes is recorded on the chain as an event.¹

From proposal to payment

1. Propose. Any owner starts by creating a proposal for a transaction.⁴
2. Share and sign. The proposal is shared so the other owners can approve and sign it.⁴ Safe's Transaction Service can collect these signatures off-chain, away from the blockchain.⁵
3. Submit. The transaction is sent to the Safe together with the owners' signatures.²
4. Check. The Safe checks that each signer is an owner and that each signature is valid.² Only if enough owners have signed is the transaction allowed to run.²

A Safe can also bundle several simple transactions into one, so owners sign once instead of several times.¹

Add-ons: modules and guards

Modules are add-on contracts that give a Safe extra features.⁶ Examples include daily spending allowances, which can be spent without the other owners' approval, and tools to recover a Safe.⁶ A basic Safe needs no modules. Adding or removing one needs the threshold of owners.⁶

A module can skip the signature check altogether.² So Safe warns that modules can be a security risk, and that a malicious module can take over a Safe.⁶ Its advice is to add only trusted, audited modules.⁶

Guards work the other way round. They check a transaction before and after it runs, and they can block it.⁷ A broken guard can stop a Safe from working at all.⁷

Code can fail too

ethereum.org lists the Parity multisig wallet hack, in which $30 million was lost to hackers.⁸ It also lists the Parity frozen wallet issue, which left over $300 million in ETH locked forever.⁸