Stepan Simkin is the Co-Founder and CEO of Squads Protocol, a smart contract wallet infastructure for web3 teams. He ventured into the Solana ecosystem in 2021, and resurfaced with an understanding of what the ecosystem needed most — a smart contract wallet infrastructure builders could rely on.
In conversation with NATION, he tells us how Squads intended to solve that problem, the obstacles he encountered along the way, and his advice for teams enduring a similar challenge.
Elle: Thank you for taking the time to speak with me. Let’s start from the top. What did the earliest iterations of Squads look like?
Stepan: Nothing like what it looks like now.
The earliest idea for Squads was something along the lines of Telegram with a wallet. We wanted something like a group chat where you and your friends could pool money together to do fun things.
But as we learned more about Solana, it became clear that a strong multisig infrastructure didn’t exist there yet. There was no multisig tool that Solana could rely on at the time — no single standard. It was still in its infancy as a chain. If we wanted to build our idea, we’d either need to wait for someone else to build the infrastructure or build it ourselves. Of course, we went with the latter.
Building multisig infrastructure was not what we had originally set out to do — but it’s what the ecosystem needed. It was an essential building block that no one had bothered to initiate. So, we agreed that this would be the new direction to go in, and the next step was figuring out how to make it as secure and agnostic as possible.
Elle: What do you mean by agnostic?
Stepan: Making software agnostic means allowing for maximum optionality. For Squads, there are multiple layers to that answer.
First, the architecture of the protocol itself — of the core multisig logic — is agnostic in the sense that every transaction is a simple, arbitrary instruction. That means that every integration that we do, every new feature that we ship, is just a different wrapper on top of that core code base.
We haven’t touched the core multisig code base since we launched it. And the idea is — once we formally verify it and make it immutable — we never touch it again. Essentially, we can freeze the code without sacrificing user experience, or any features we want to ship in the future. That being said, the idea with Squads' latest version was to make it as agnostic as possible so that we never need to change the code to accommodate an integration.
Also, if you are looking to leverage our infrastructure together with your DAO governance set up, the protocol itself is standard agnostic. It can be used with SPL-governance and any other standard in the Solana ecosystem. So, Squads can be used with any type of DAO — as a multisig or a subDAO framework
Elle: And there are many types of DAOs.
In my opinion, today's categorization — social DAOs, protocol DAOs, and so on – is going to go away. Every DAO will be a protocol, doing bits of each of the social, investment, and fundraising streams at some point in their lifetime. That being said, we need Squads to apply to any DAO of any kind.
You could even go as far as using Squads as a foundation for the DAO itself. For example, let’s say you want to start building on Solana, and contributors are trickling in to help. Before building a DAO, you can start with a Squad, get some funds into the vault, and use those funds to pay your contributors. As the project progresses, you can easily transfer those parts of your control over to the governance standard of your choosing.
After you have done that, you can come back to Squads and say, “Okay, now we want to spin up a couple of these under the umbrella of our DAO to have a more efficient way to distribute the governance internally.” You can transfer the authority over that Squad to a DAO, and now the DAO can vote: “Let us put people in this Squad, let us remove them from that one.” That gives them HR capabilities. Token holders, in the end, can’t just vote to move these people around, adding another layer of checks and balances to the DAO.
Elle: What is the greatest obstacle you’ve faced while building Squads?
Stepan: Getting people to believe in it.
When we decided to focus on building a multisig infrastructure, we were lucky enough to have incredibly smart people on our team, like my co-founder Sean Ganser, who made the development process feel easy. Building the multisig wasn’t the problem. The problem was bootstrapping it as the standard.
It’s a fresh new piece of code. We just wrote it. Yes, we can audit it. We can have everything mapped out on the security side. But how do you catch people’s attention? Better yet, how do you keep it?
The way we've done it is by capturing intellectual capital — talking to the smartest developers, talking to the smartest teams, and talking to the outspoken builders who may be able to convey their thoughts more clearly than others. To this day, I don’t have a business development person. I just reach out to these people by myself, send them to Squads, and ask them to scrutinize the code as much as possible. I want them to give me something to fix. If they don't have any negative feedback, I'd ask them to try it again.
Over time, this helps us discover what people are excited about, what they are looking for, and what Squads might be lacking according to those answers.
Elle: Are there any other infrastructure projects that have caught your attention?
Stepan: We like Backpack, we like Phantom, we like Glow. We like Helius and their work on indexing and APIs. We like SolanaFM and the way they do the block explorer.
I think in terms of infrastructure that we use, we're looking forward to trying Ironforge. They're building a bunch of cool developer tools — but none of them are out yet. There's also something called Better Call Sol, which was built by Lab Eleven. They were a great inspiration for us when we were building our own transaction builder. You can make an argument that it is still very agnostic, but on the public level where you can essentially use our transaction builder to fill in the data yourself and interact from your multisig with any program on Solana.
On a personal level, I’ve spent the last few months diving down the rabbit hole of what Jito on Solana and Flashbots on Ethereum have been doing with MEV (Miner Extractable Value).
I've also been looking at Cosmos for the last two months, learning about the Cosmos' SDK and the different environments that they have.
Plus, I'm still trying to wrap my head around crypto gaming. I do these deep dives every month to see what's out there. I can't shake this feeling that we got crypto gaming wrong from the outset — that it should have been these awesome smaller indie games with a crypto edge, not everybody trying to build StarCraft on the blockchain.
Elle: What about Squads itself — what excites you most about what you've built?
Stepan: I’d say it's our ability to expand past traditional wallet mechanisms and into new territory.
For example, I used to have this mirror board with different types of assets that teams can currently manage on Solana, and that's allowed us to expand the definition of multisig from being a wallet to being a consensus mechanism. A wallet is something inherently related to the treasury, but we realized that, with a multisig, you can manage the treasury, but also programs, validators tokens, and eventually, a lot more.
That being said, I think what excites me most is the fact that we can cover a majority of the on-chain assets that a team on Solana needs to manage. And, even more exciting, we can accompany the project throughout its entire lifespan.
For example, let’s say a project has just entered the hackathon and won a grant. They can create a squad and put the grant in the multisig. Then, they raise some VC funding, and they put that in the multisig, as well. Once they feel like they're ready to start investing in their own employees, they can onboard through the squad, vest through our partners that we've done immigrations with, and continue that process until they’re ready to become a full-scale DAO. Then, they can start transferring assets from the multisig to the token holders.
Even when they are a DAO, Squads has modules — one of them is called Mesh —which allows you to utilize the multisig infrastructure as your subDAO framework.
With Mesh, your DAO can vote on-chain to create a bunch of multisigs as your subDAOs, and they can act as departments within your larger organizations. As long as the project exists, it can rely in some way on our infrastructure. That's what excites me most.
Elle: Any advice for new builders?
Stepan: Trust but verify.
That applies to almost everything. If you’re building a team and you’ve just found a great developer — trust that they are there to do good work, but verify their skills. If you've found a new project and you want to participate — trust that they deserve your time, but verify that they are using it wisely. It even applies to the work you produce yourself. You can trust that you’ve done a good job, that you know what you’re doing, and that you’ve built something valuable — but you need to verify yourself somehow.
The best way I have been able to verify my own work is by speaking to people who have more experience than me — whose opinions I value — and asking for their feedback. That’s a huge reason why Squads has been successful.
Elle: Has your perspective changed in light of recent events in crypto?
Stepan: Not really.
If anything, I think that the recent events have shown more people that self-custody is important. We are providing self-custody tools specifically for that reason. But I don’t think that the sentiment around Solana “dying off” is reliable. It's the second-largest ecosystem in terms of developers and real projects being built after Ethereum — and I don't see that changing.
Everything that's happened in the last few weeks is not positive, but it’s not the first time we’ve had to endure dark times. So, I don’t think we're making any pivots. We're still freezing V3, and formally verifying it as we intended. There are always things that you will want to add from a feature perspective, but we also need to cut it off at a certain point, freeze it, formally verify it, and move on. And I think that's the process we're going to repeat for a few years — or at least for a few months until we feel like the latest version is complete.
Recent events have certainly accelerated that process, especially when it comes to self-custody infrastructure — basically providing them more infra for them to do it internally — but that's pretty much it for now. We feel like there's a lot more work to be done in Solana before we move to other things.
Elle: What work do you think needs to be done?
Stepan: We need a simple governance experience.
We need a Juicebox-type solution on Solana. It's long overdue — but there have been meaningful attempts. Especially considering that, in the current placement cycle, we don't really have that many active DAOs. But in the bear market, people start thinking about DAOs a lot more pragmatically. Eventually, things will pick up, everyone will become a lot more positive, and that's when the real potential DAOs will be exposed. That means we're going to need the right tools.
Right now, we need a tool that makes it easy to create your own DAO. We need secure governance frameworks — frameworks that are up to snuff with regulatory standards. We need a DAO creation platform that people can rely on.
I am a huge fan of Realms, but it does get technical and complicated pretty quickly which can be prohibitive for certain types of users. A cohesive experience on the governance front is still very much needed. Which is why NATION seems particularly exciting.
You have a similar opportunity to the one I had last year. I started Squads because it was something the ecosystem needed. We needed a standard multisig infrastructure in order for builders to reach their full potential.
The same thought process applies to DAOs. If we want digital cooperatives to create the large-scale impact we know they are capable of, our ecosystem needs something like NATION — a strong, stable foundation for DAOs to stand on.
That's a big responsibility on your end. It's not easy to build something the ecosystem desperately needs — but has never seen before. I've been in similar shoes, so I'm excited to see you guys take it on.
Squads is rooting for you along the way.
Elle: Thank you, Stepan. We really appreciate it. And we're rooting for Squads along the way, too.
Stepan: Thank you.