📑
DeFi Saver Knowledge Base
  • Welcome to DeFi Saver Knowledge Base
  • General
    • What is DeFi Saver?
      • Boost & Repay
      • Smart Contracts
      • DeFi Saver and security
      • Liquidity Sources of DeFi Saver
      • DeFi Saver Fees
    • Smart Wallets
      • Can I access DFS created positions using other apps?
      • Why did we switch to Safe?
    • Wallet Compatibility
    • Troubleshooting common issues
      • Error: "An issue was detected with this transaction that would cause it to fail" - what to do
      • How can I withdraw tokens from my Smart Wallet?
      • My MetaMask account is failing to load - what should I do?
      • My transaction is pending / not going through - what should I do?
      • I cannot make any transactions using DeFi Saver after using Furucombo?
      • Avoiding MEV with your transactions
  • Features
    • ETH Saver
      • How does ETH Saver work?
      • Profit tracking & how does it work
      • Positions in ETH Saver
      • Are there fees?
        • Are there any costs that are not immediately noticeable?
    • Automation
      • Automation strategies
      • Requirements for using Automation
      • Automation Fees
      • How does Automation work?
      • When are Automation transactions made?
      • Are there risks when using Automation?
    • Recipe Creator
      • What are Flash Loans?
      • Is Recipe Creator safe to use?
      • Pre-made recipes / Recipe Book
      • How can I reuse output of previous functions?
    • Loan Shifter
      • Collateral Swaps
      • Debt Swaps
    • Notify
      • Notification Monitors
      • How do I set up Notify?
    • Simulation Mode
    • Smart Savings
      • Overview of Yearn
      • Overview of Convex
      • Overview of mStable
      • Why is a smart wallet needed for using Smart Savings?
      • How to start lending funds and earning interest using Smart Savings?
      • Managing existing portfolios using Smart Savings
      • The difference between APR and APY
      • Are there any security risks?
    • Bridge
    • Exchange
      • What are Limit Orders?
      • What is DCA?
  • Protocols
    • Aave
      • Aave Dashboard
      • Aave versions comparison
      • How does Aave Automation work?
      • Can I manage my existing Aave lending/borrowing portfolio using the Aave dashboard?
      • What are Flash Loans?
      • How can I long or short assets using Aave?
      • Staking Aave tokens
      • How can I tell how much interest I will earn or have already earned using Aave?
      • How can I swap my collateral or debt in Aave?
      • Migrating your Aave position(s)
      • Pendle Principal Tokens (PTs) on Aave
    • CurveUSD
      • What is LLAMMA in CurveUSD?
      • How do you create a loan in CurveUSD protocol?
      • Does CurveUSD charge any fees?
      • Is there a standard (hard) liquidation in CurveUSD?
      • What are bands in CurveUSD?
      • Why do I need a Smart wallet for CurveUSD?
    • Compound
      • Compound Dashboard
      • Can I manage my existing Compound lending/borrowing portfolio using the Compound dashboard in DeFi S
      • How to earn and withdraw COMP tokens
      • How can I tell how much interest I will earn or have already earned using Compound?
    • Fluid
      • Intro to Fluid
      • Liquidity Layer
      • Lend Protocol
      • Vault Protocol
      • DEX Protocol
      • DeFi Saver-supported Features
    • Liquity
      • Liquity Dashboard walkthrough
      • What is a Trove?
      • Liquity Redemptions
      • How to stay protected from redemption risk in Liquity
      • How do Liquidations work in Liquity?
      • What are the key benefits of Liquity?
      • Does Liquity charge any fees?
      • What is a Stability Pool?
      • What is the "Debt-in-Front" value in Liquity?
      • How can I earn LQTY tokens?
      • Why do I need a Smart wallet for Liquity?
    • Liquity V2
      • Intro to BOLD
      • Borrowing Rates and Redemptions
      • Collateral Ratios
      • Troves as NFTs
      • Revenue Distribution and Forkanomics
      • LQTY Staking
      • DeFi Saver-supported Features
    • Chicken Bonds
    • MakerDAO
      • Managing the Dashboard
      • Automation options for MakerDAO
      • What is a CDP and why should I be interested in opening one?
      • How do Boost & Repay work?
      • How does CDP Automation work?
      • Can I transfer my MakerDAO Vault to a different address?
      • Can I manage MakerDAO Vaults created using other apps at DeFi Saver?
    • Morpho Blue
    • Reflexer
      • Reflexer Dashboard walkthrough
      • How can I start borrowing or leveraging using Reflexer?
      • What makes Reflexer unique?
    • Spark
      • Spark Dashboard walkthrough
      • What is sDAI?
      • Liquidations in Spark
  • Legal
    • Terms and Conditions
Powered by GitBook
On this page
  1. General

Smart Wallets

PreviousDeFi Saver FeesNextCan I access DFS created positions using other apps?

Last updated 1 year ago

TLDR: A Smart Wallet is a smart contract-based wallet that enables easier position management and various complex operations. It is essentially your DeFi Saver/ETH Saver account, as it keeps all your positions created using both apps.

Your Smart Wallet is created by you, owned by you and it can be accessed and managed solely by you.

  • Why is it needed?

DeFi protocols support simple, straightforward operations inside a single transaction. For example, you can execute a simple ETH supply on Aave. However, in order to do a complex task such as leveraging ETH to borrow DAI and sell it for more ETH, you would have to execute at least 3 separate transactions.

What smart contract-based wallets enable you is to execute multiple things inside a single transaction (for the techies: they do this by providing an execution context using `delegatecall`). Thus, instead of 3 separate transactions, you would execute a single one.

Once you have this flexibility, you are able to do all sorts of things such as easily creating leveraged positions, shifting them effortlessly between protocols and assets, or creating completely custom-tailored recipes for your specific use case.

Some of these operations would be significantly less safe to do over separate transactions. For example, executing a position Repay when you're near liquidation (withdraw some collateral, swap, and pay back some debt) would be risky, as it would temporarily decrease your liquidation ratio even further. Executing all the steps at once, atomically, is a safer and easier way to do it. Additionally, many of these operations wouldn't even be possible without a Smart Wallet. Anything that uses flash loans is a good example of this. A flash loan would allow you to repay a large chunk of a position even when you don't have enough unutilized collateral to use as liquidity.

  • Is a Smart Wallet safe to use?

In addition to added flexibility, these wallets represent an additional layer of safety by providing a layer of separation between your main wallet (often referenced as an Externally Owned Account - EOA) and the DeFi protocols you use. Token approvals are never given directly to the protocol, but instead proxied through the Smart Wallet.

The wallet itself is fairly minimal and has been battle-tested since 2018. In technical terms, it is MakerDAO's . In fact, if you ever used the Maker protocol in the past, you already have a Smart Wallet that will be used in DeFi Saver (and vice-versa). ETH Saver uses a separate registry for technical reasons (in order to support multiple positions per protocol, as well as advanced profit tracking), but the actual wallets are exactly the same.

  • Is the DSProxy Smart Wallet cross-compatible?

We decided to use Maker's DSProxy as a basis for DeFi Saver in the beginning as it was and is a thoroughly tested and well-audited piece of open-source code that's perfectly capable of doing everything we have imagined and created as of now. Additionally, this being an open standard and registry, we hoped other protocols and interfaces would adopt it, seeing it as a key to DeFi's interoperability. However, the ecosystem diverged over time, with protocols implementing an EOA-only or a protocol-specific bundling approach, and different interfaces developing walled gardens using proprietary, closed-off, allowlist-based wallets.

DeFi Saver's team remains committed to supporting an open ecosystem, using open and permissionless standards. We hope to see a unified approach adopted across DeFi in the future, and we are actively following and supporting efforts to do so, account abstraction being one of them.

What this means for you in the meantime, is that positions created in DeFi Saver will most often not be accessible using other interfaces. MakerDAO CDPs are an exception, as they started off on an open standard from the get-go, and are for the most part still created on DSProxy-based wallets in the wild.

Additionally, as mentioned above, in order to support multiple Smart Wallets per EOA (multiple positions per protocol), as well as precise profit tracking, ETH Saver uses a separate registry from the original MakerDAO one. This means that your Smart Wallets don't carry over between DeFi Saver and ETH Saver.

DsProxy