Multisigs are well-known for the security they provide to users who want to manage on-chain assets. Although robust and secure, for a long time it was challenging for teams and organizations to use their funds held in a multisig as seamlessly as they would with traditional self custody solutions such as hot wallets, without sacrificing the benefits of multi-signature security.
Over the last year, we have spent time building a new way to allow Squads multisigs to interact with Solana dApps with the familar UX of regular wallets. This not only "unlocks" the value managed in Squads multisigs for the ecosystem for the first time, it also enables enterprises and teams to operate on-chain with the operational security of their multisig setup. Let's dive into SquadsX and why this represents a significant advancement for Solana.
A Secure Way to Interact with Solana dApps
Traditional wallet solutions don't allow for shared management of assets. If teams and organizations want to start operating on-chain, they have to either rely on one single key or person for the security of the assets used. This can lead to unwanted situations where not only could the person holding the funds steal them, they could also simply have their key compromised, impacting the project’s assets.
On-chain organizations often have to interact with dApps for their business operations, whether it's providing liquidity for their native token or hedging their exposure to SOL. This is more emphasized for funds/institutions looking to perform complex strategies on-chain, such as opening a delta-neutral position on a DEX, arbitraging rates between lending protocols, but require a reliable setup to do so.
That is why we developed a companion tool to our multisig app: SquadsX. Multisigs offer all the operational efficiency and security that teams and organizations need. They can add key stakeholders, store their liquid assets like SOL, staked SOL, ecosystem tokens and ensure every transaction needs to be approved by several members until the multisig threshold set is reached. But while the Squads app supports essential actions like swapping and staking, it quickly became challenging to enable users to perform granular actions on dApps from their multisig. Here comes SquadsX.
SquadsX has been built with enterprise-level security in mind, powered by multisig technology. Rather than being a wallet, SquadsX acts as an extension to the Squads app, enabling users to connect their multisig to any dapp as they usually would with a regular wallet. Teams can now explore the vast ecosystem of dApps on Solana and connect the funds held in their multisig to it. This enables teams and institutions to tap into the Solana ecosystem with their security requirements and undertake various on-chain activities like liquidity provisioning, lending/borrowing, on-chain futures and more.
However, while the "Connect to dApps" experience mirrors that of conventional wallets, executing transactions with SquadsX diverges both in the process and the enhanced security it offers.
How Does SquadsX Work
The main purpose of SquadsX is to simplify the creation of multisig transactions. Unlike regular wallets where all transactions are done through the wallet itself, SquadsX only connects to dApps to send transactions to the multisig, moving the funds from it to those dApps. See it as a way to link a multisig to a dApp and trigger transactions for it.
For instance, a team could use SquadsX to provide liquidity for their token on Raydium. One of the members can use SquadsX to connect the team’s multisig to Raydium and trigger a multisig transaction to deposit funds into a Raydium liquidity pool from the multisig. This transaction will appear on the Transactions page of the Squad and will be processed once all the members have approved and executed it.
When setting up SquadsX, a new key is created and added as a member to the Squads multisig. This member/key is used to create those multisig transactions through SquadsX for the multisig, and hence it only needs the “Proposer” role. By leveraging multisig, SquadsX significantly reduces the success of harmful transactions, making it unlikely for an on-chain organization to lose funds or experience theft from a member. Even if the key used for SquadsX is compromised, it wouldn’t be able to move any funds out of the multisig. This is very different from regular wallets where interacting with a malicious program could immediately compromise the assets held within.
SquadsX is built on Squads Protocol v4, a program that has been audited three times by: Trail of Bits, OtterSec, and Neodyme. It is currently undergoing two formal verifications by Certora and OtterSec. Squads Protocol is as of today the most trusted multisig infrastructure on Solana and it is used by the largest Solana-based organizations, securing over $600 million in value.
While WalletConnect is a well-known solution in the EVM ecosystem for dApp connections, it wasn't as established or tailored for Solana when we started developing SquadsX. Building our own extension gave us the flexibility we needed to perfect the experience of connecting multisigs to Solana dApps. Most crucially, WalletConnect lacked a specific feature required for SquadsX. The main goal of SquadsX is to take a transaction from a dApp, convert it into a multisig transaction proposal, to then sign it and send it back. Though we considered WalletConnect, we found that its current design only allowed for returning a signature, not a fully signed transaction.
Building SquadsX is a huge achievement for the ecosystem and the next generation of Solana wallets, albeit accompanied by its unique set of challenges.
Paving the Path for a New Era of Wallets and Their Challenges
As SquadsX represents a novel approach to interacting with Solana programs, launching it presented challenges such as compatibility issues with dApps. Right off the bat, SquadsX might already be perfectly integrated with your favorite dApps, assuming it supports the latest Solana Wallet Standard and embodies certain characteristics that we will cover below.
SquadsX can be considered as part of the new generation of wallets on Solana. Built on multisig technology, transactions done with SquadsX deviate from standard wallet transactions since they require multiple approvals before execution. This creation and execution of a transaction become an asynchronous multi-step process. This can cause some UI issues for dApps that don't recognize “delayed” transactions, either displaying a “confirmed transaction” or “error” pop-up when trying to execute a multisig transaction. In both cases, this most often doesn't impact the success of the transaction but provides a less than optimal experience for users.
Wrapping a standard transaction into a multisig transaction proposal is also a complex process, which can fail if the size of a transaction becomes too large. The best solution to overcome this problem is by implementing:
Address Lookup Tables (ALTs) - it reduces the size of a transaction by storing public keys in a lookup table and then referencing them by their index;
and Versioned Transactions - it ensures that even if the transaction format or the smart contract's logic changes in the future, older versions can still be processed correctly.
Thankfully, most newer dApps already implement both concepts, allowing SquadsX to already work smoothly with them.
Additionally, dApp developers should avoid using Ephemeral Signers (ES) in transactions as they are keys that sign and are immediately discarded. This mechanism is problematic with wallets like SquadsX that don't instantly execute transactions, as the ephemeral keypair won't be available later to sign the "execute" transaction. Instead:
Prefer
SystemProgram.createAccountWithSeedoverSystemProgram.createAccount: The former doesn't require the new account's signature since the new account is controlled by a known base public key, often the primary signer.Use SquadsX's
getEphemeralSignersAPI: If you need a secondary signer, SquadsX provides an API to request ephemeral signers directly from the wallet.
Lastly, Squads multisigs are PDAs, and while powerful, they inherently cannot sign messages. Thus, we strongly advise developers against making Sign-In mandatory for using their dApp.
By implementing these changes, developers will more likely make their dApps compatible from day one with this new generation of wallets, allowing users from those solutions to engage with their projects.
Get Started with SquadsX
SquadsX is now available to all Pro subscribers through the Squads app and is already compatible with many Solana dApps. In the coming weeks, we will be working with the last major Solana dApps that are not yet fully compatible with SquadsX to allow them to seamlessly work with it. For dApp developers looking to integrate SquadsX, check out the SquadsX development documentation.
We’re excited to finally roll out the first multisig extension wallet for Solana and look forward to seeing how it will help the ecosystem in onboarding more advanced and institutional players in need for a reliable and secure setup to operate on Solana.
About Squads Labs
Squads Labs is a core contributor to Squads Protocol, the leading multisig infrastructure on Solana. In addition to helping maintain the protocol, Squads Labs makes the Squads platform, an institutional-grade multisig platform for Solana-based teams. The Squads platform helps web3-native teams manage and secure digital assets on-chain. To learn more about Squads Labs, visit https://www.sqds.io/.
About Squads Protocol
Squads is a multisig protocol that helps web3-native teams manage and secure digital assets on-chain. Squads Protocol v3 is the first formally verified program on Solana. Squads Protocol v4 introduces time locks, spending limits, roles, sub-accounts, fee relayers, multiple-party payments, support for SquadsX and more. Squads v4 has already been audited by Neodyme, OtterSec. To learn more about Squads Protocol, visit https://squads.so/protocol
