The Genesis of Squads Protocol

Squads Protocol, a prominent multi-signature wallet solution in the Solana ecosystem, has an origin story as unique as its functionality. Stepan, the co-founder and CEO of Squads, brings a fascinating background to the world of blockchain. Unlike many crypto entrepreneurs who come from technical backgrounds, Stepan's journey began in the realm of traditional corporate governance and structure, specifically in mergers and acquisitions.

During the 2017 crypto boom, Stepan found himself at the intersection of traditional finance and the burgeoning world of cryptocurrencies. As clients at his law firm began inquiring about Bitcoin and its potential legal implications, Stepan was thrust into the role of crypto interpreter. He recalls, "I had to write some memos and figure it out. I basically distilled it into simple wording for very non-technical people, and me, myself, being non-technical." This experience laid the groundwork for his future endeavors in the crypto space.

The Spark of Innovation

While the 2017 crypto cycle eventually cooled, Stepan's interest in the technology remained. It wasn't until 2020 that he found himself drawn back into the crypto world, this time with a specific focus on governance within the Ethereum ecosystem. Stepan explains, "I think for what I was interested in was governance, how it could disrupt what I was doing in terms of formation of legal entities, and potentially ownership on the internet."

This interest in governance led Stepan to explore various Decentralized Autonomous Organization (DAO) tools on Ethereum. However, it was in early 2021 that Stepan discovered Solana, a blockchain that would soon become the foundation for Squads Protocol.

The Solana Season Hackathon: A Turning Point

The Solana Season hackathon proved to be a pivotal moment in the creation of Squads. Stepan and his long-time friend Danny, who had a background in finance, decided to participate. They put out a call in the Discord channel, seeking like-minded individuals interested in building something related to governance.

"About 30 people responded," Stepan recalls. After a selection process, they formed a team of six with the ambitious goal of creating a "very simple all-in-one mobile first governance platform MVP." While they didn't complete the project by the end of the hackathon, the experience laid the groundwork for what would become Squads Protocol.

From Governance to Multi-Sig: The Evolution of Squads

As the team continued to work on their project post-hackathon, they realized the need to focus on core primitives within the Solana ecosystem. Stepan explains, "We first got to a governance framework or a governance platform. And then we even stripped it down further to multi-sig primitive."

This pivot from a broad governance platform to a focused multi-signature solution marked a significant turning point for Squads. In September 2021, the team went full-time on the project, raised their first pre-seed round, and fully committed to building on Solana.

Understanding Multi-Sig Wallets

Multi-signature wallets, often referred to as "multi-sigs," are a crucial component in the world of cryptocurrency security and management. Stepan provides a clear definition: "Multi-sigs are usually called wallets. That's something we call them as well. But I think in reality, they're just a consensus mechanism... It's a consensus mechanism for a bunch of keys on the blockchain to agree whether a transaction should go through or not."

From a product perspective, a multi-sig functions as a wallet managed by a group of people. This group can range from two or three individuals to as many as 20, though Stepan notes that beyond that number, the user experience can become chaotic.

The Versatility of Multi-Sig Solutions

While treasury management is often the first use case that comes to mind for multi-sig wallets, Squads has expanded the concept to encompass a much broader range of applications. Stepan elaborates, "What you can really manage with a multi-sig is like anything that exists on chain."

This expansive view has led Squads to develop solutions for program management, validator management, and token authorities. For instance, when launching a program on Solana's mainnet, the upgrade authority needs to be held securely. A multi-sig solution provides a way to decentralize control among team members or a trusted group, enhancing security for high-value protocols.

The Technical Architecture of Squads

One of the most intriguing aspects of Squads' technical architecture is its agnostic nature. Stepan explains, "Everything is just an arbitrary instruction from an on-chain perspective." This means that the core program doesn't need to be modified to accommodate new features or use cases. Instead, the team focuses on creating user-friendly interfaces and workflows to make these features accessible.

This approach has allowed Squads to maintain an immutable core program while continuously expanding its feature set. Stepan notes, "We haven't touched on Chaincode since because we can't really do anything with it anymore. So the programs are mutable, right?"

Squads V4: The Next Evolution

While the current version of Squads (V3) has been running successfully for months, the team is not resting on its laurels. Stepan reveals that they are working on the next iteration of the protocol, V4, which is set to launch in the coming month.

V4 will introduce several new features that users have been requesting:

1. Roles: When adding a key to the multi-sig, users can now specify whether they can be an executor, a voter, or an initiator of a transaction, or any combination of these roles.

2. Spending Limits: Users can set limits on how much of a specific token can be withdrawn from a vault within a given timeframe without passing the full threshold.

3. Whitelisting: Specific addresses can be whitelisted for transactions without needing to pass the full threshold.

4. Time Locks: This feature is particularly important for protocols considering decentralization. It allows for a time delay between when a transaction is proposed and when it can be executed, giving users time to react if they disagree with the proposed action.

The Importance of Security in Multi-Sig Solutions

Given the critical nature of multi-sig wallets in managing valuable assets, security is paramount for Squads. Stepan describes an almost obsessive approach to ensuring the security of their protocol:

"We had to figure out a formula internally, even before we even think about, you know, the user base, you know, what's this security formula that we want to satisfy to be ourselves, you know, confident in the program."

This approach has led Squads to pursue multiple security audits, formal verification (a first for Solana programs), and continuous consultation with security experts. Stepan's goal is clear: "I want 100% certainty that nothing's going to happen."

The Future of Squads and Multi-Sig Solutions

Looking to the future, Stepan sees potential in expanding Squads beyond just Solana-native assets. He envisions Solana serving as a "UX consensus layer" where users set up their multi-sig and core logic, but can manage assets across multiple blockchains.

This cross-chain vision could open up Squads to a broader user base, including tech-oriented startups that might be willing to forgo traditional bank accounts in favor of a more programmable, blockchain-based solution.

The Role of Non-Technical Founders in Blockchain

Stepan's journey as a non-developer founder in the blockchain space offers valuable insights for others looking to enter the industry. He argues that being non-technical can actually be an advantage, especially when it comes to security-first development.

"If you're a better experienced developer that has done a lot of things, has tons of experience, usually it's like move fast, break things and the approach is very, let's just ship it, let's get it out, it's going to work, it's going to be fine, we'll audit it at some point. This kind of mentality, I think I never, because I'm not technical, I actually don't have that background, for me it's like, wait, let's get a second opinion on this, let's see how that can work."

This cautious approach has been instrumental in ensuring the security and reliability of Squads Protocol.

Governance in Crypto vs Traditional Corporate Governance

Drawing from his background in corporate governance, Stepan offers a unique perspective on how governance in crypto compares to traditional corporate structures. He notes that while there are similarities, such as the concept of stakeholders and value distribution, crypto governance is still evolving.

"I think the governance that actually, but that's if we compare the governance we potentially want to see in crypto to the governance outside of it, I think the governance we actually have right now that works is very much limited to these very core functions of the protocol, and even the proof-of-stake systems."

Stepan believes that as the crypto space matures, we may see innovations in governance that diverge significantly from traditional models, potentially offering more efficient and transparent ways of managing decentralized organizations.

The Challenges of Decentralization

While decentralization is often touted as a core value in the crypto space, Stepan takes a nuanced view. He argues that the level of decentralization should be determined on a case-by-case basis, depending on the specific needs and goals of each protocol.

"For some protocols, decentralization is a great feature. It should be there for some, it's a bug and it just doesn't need to exist."

This pragmatic approach allows for a more flexible and efficient development process, where the focus is on creating value and utility rather than adhering to rigid ideological principles.

The Importance of Immutability in Smart Contracts

One interesting perspective that Stepan brings to the table is the value of immutability in smart contracts. He suggests that for many protocols, immutability might be more crucial than decentralization:

"I'd rather see more protocols immutable than decentralized just because I'm skeptical of the level they can get decentralized."

This focus on immutability provides a level of security and reliability that can be particularly valuable for core infrastructure protocols like Squads.

The Evolution of Squads' Product Offering

As Squads continues to evolve, the team is focusing on enhancing the user experience for teams building on Solana. Stepan describes their current efforts:

"The key focus for us in the coming months, at least, will be around just the product offering on Solana specifically, what you can actually... How can we enhance the experience for teams and their workflows when it comes to managing the treasury, their programs, and a bunch of other developers."

This includes developing a more SaaS-like interface that caters to the needs of crypto-native teams while also potentially appealing to more traditional businesses looking to explore blockchain-based solutions.

The Potential of Blockchain for Traditional Businesses

While Squads is currently focused on serving crypto-native teams, Stepan sees potential for broader adoption in the future. He envisions a world where startups might choose to hold their assets in USDC on a Squads multi-sig rather than using a traditional bank account.

This vision speaks to the broader potential of blockchain technology to revolutionize not just finance, but also how businesses manage their operations and assets.

The Importance of Continuous Security Improvements

Even with multiple audits and formal verification, Stepan and the Squads team remain vigilant about security. They continually seek new ways to enhance the security of their protocol, recognizing that the threat landscape in crypto is ever-evolving.

This commitment to security extends beyond just the smart contract level. As Stepan notes, they're now also focusing on potential social engineering risks and how to mitigate them through better user interface design and education.

The Role of Multi-Sigs in the Future of Finance

As the conversation wraps up, it becomes clear that multi-signature wallets like Squads are not just a niche tool for crypto enthusiasts. They represent a fundamental shift in how we think about asset management, corporate governance, and financial security in the digital age.

Stepan's vision for Squads extends beyond just being a tool for managing crypto assets. He sees potential for it to become a new kind of financial infrastructure, one that combines the programmability and global accessibility of blockchain with the security and control features that businesses and individuals need.

Conclusion: The Future is Multi-Sig

As we look to the future of finance and digital asset management, it's clear that solutions like Squads Protocol will play a crucial role. By providing a secure, flexible, and user-friendly way to manage on-chain assets and authorities, Squads is helping to build the infrastructure needed for widespread adoption of blockchain technology.

Whether you're a crypto-native team managing a complex protocol, a traditional business looking to explore blockchain solutions, or an individual seeking more control over your digital assets, multi-signature wallets offer a powerful tool for navigating the evolving landscape of digital finance.

As Stepan succinctly puts it in his parting words: "Use a multi-sig, stay safe." In the wild west of crypto, this advice might just be the key to unlocking the full potential of blockchain technology while mitigating its risks.

Facts + Figures

• Squads Protocol is a multi-signature wallet solution built on the Solana blockchain
• Stepan, co-founder of Squads, has a background in corporate governance and mergers & acquisitions
• Squads originated from a project in the Solana Season hackathon in 2021
• The team pivoted from a broad governance platform to a focused multi-signature solution
• Squads raised its first pre-seed round in September 2021
• The current version of Squads (V3) has been running immutably for about seven months
• Squads V4 is set to launch in the coming month, introducing new features like roles, spending limits, and time locks
• Squads is the first Solana program to undergo formal verification
• The protocol has undergone multiple security audits
• Squads currently focuses on serving crypto-native teams building on Solana
• The team envisions expanding to support cross-chain asset management in the future
• Stepan sees potential for startups to use Squads multi-sigs instead of traditional bank accounts
• The Squads team consists of three co-founders with diverse backgrounds: Stepan (non-technical), Danny (product-focused), and Sean (technical lead)
• Squads aims to provide a more SaaS-like experience for managing on-chain assets and authorities

Questions Answered

What is Squads Protocol?

Squads Protocol is a multi-signature wallet solution built on the Solana blockchain. It provides a secure way for groups to manage on-chain assets and authorities collectively. The protocol allows teams to set up shared wallets with customizable approval thresholds, making it ideal for managing treasuries, program upgrades, and other critical on-chain operations.

How did Squads originate?

Squads originated from a project in the Solana Season hackathon in 2021. The team, led by Stepan and his co-founder Danny, initially aimed to build an all-in-one mobile-first governance platform. After the hackathon, they pivoted to focus on multi-signature functionality, recognizing it as a crucial primitive for the Solana ecosystem. They raised their first pre-seed round in September 2021 and went full-time on the project.

What are the main use cases for Squads multi-sig wallets?

The main use cases for Squads multi-sig wallets include treasury management, program management, validator management, and token authority management. Teams can use Squads to collectively manage their funds, control program upgrades, manage validator operations, and handle token minting and burning authorities. The protocol is designed to be flexible, allowing for a wide range of on-chain asset and authority management scenarios.

How does Squads ensure the security of its protocol?

Squads ensures the security of its protocol through multiple measures. These include regular security audits, formal verification (a first for Solana programs), and continuous consultation with security experts. The core program of Squads (V3) has been running immutably for about seven months, adding to its security through prolonged live testing. The team also focuses on potential social engineering risks and works to mitigate them through user interface design and education.

What new features are coming in Squads V4?

Squads V4, set to launch in the coming month, will introduce several new features. These include roles (allowing users to specify whether a key can be an executor, voter, or initiator), spending limits (setting thresholds for withdrawals without full approval), whitelisting (allowing specific addresses to transact without full threshold approval), and time locks (introducing a delay between transaction proposal and execution). These features aim to provide more flexibility and security for users.

How does Stepan's background in corporate governance influence Squads?

Stepan's background in corporate governance and mergers & acquisitions provides a unique perspective on blockchain governance. This experience allows him to draw parallels between traditional corporate structures and decentralized protocols, informing the design of Squads to meet the needs of both crypto-native teams and potentially traditional businesses in the future. His non-technical background also contributes to a more cautious, security-first approach to development.

What is Stepan's vision for the future of Squads?

Stepan envisions Squads expanding beyond Solana-native assets to support cross-chain asset management. He sees Solana serving as a "UX consensus layer" where users set up their multi-sig and core logic, but can manage assets across multiple blockchains. Long-term, he envisions startups potentially using Squads multi-sigs instead of traditional bank accounts, highlighting the potential for blockchain technology to revolutionize business operations and asset management.

How does Squads compare to traditional financial infrastructure?

Squads represents a new kind of financial infrastructure that combines the programmability and global accessibility of blockchain with robust security and control features. Unlike traditional banking systems, Squads allows for more flexible and transparent management of digital assets, with the ability to set complex approval structures and manage a wide range of on-chain operations. It offers the potential for greater efficiency and reduced reliance on centralized financial institutions.

What advice does Stepan have for non-technical founders in the blockchain space?

Stepan encourages non-technical founders to leverage their unique perspectives in the blockchain space. He argues that being non-technical can be an advantage, especially when it comes to security-first development. Non-technical founders often bring a more cautious approach, asking for second opinions and thorough explanations, which can lead to more robust and secure products. He emphasizes the importance of surrounding oneself with the right team and being willing to learn and understand the technical aspects of blockchain technology.

How does Squads approach the balance between decentralization and functionality?

Squads takes a pragmatic approach to the balance between decentralization and functionality. While recognizing the value of decentralization, especially for core blockchain infrastructure, Stepan argues that the level of decentralization should be determined on a case-by-case basis. For some protocols, decentralization is crucial, while for others, it might not be necessary or even beneficial. Squads focuses on providing the tools for teams to manage their assets and operations securely, whether in a more centralized or decentralized manner, depending on their specific needs and goals.