Research Project: Can SAFE Contracts be Smart?

Y Combinator's Simple Agreements for Future Equity (SAFE) agreements are a type of contract used in startup seed financing. Rather than receiving shares directly for their investment, the seed investor receives a contract that is intended to be converted into preferred shares at the time of a future equity round. This circumvents the problem of placing a valuation on a very immature enterprise, and defers the complex negotiations on the terms of the preferred shares to a time when the company is ready to take on a larger investment.

This project is investigating the potential for SAFE contracts to be implemented as smart contracts on a blockchain platform. Since smart contract code is necessarily more precise and formal than legal text, the work encompasses financial analysis, legal formalisation, software engineering and computer security analysis.

Staff:

Outcomes:

• Seminar: SAFE Contract Financial Design Issues
  
  
• Project Overview Paper: Smart (Legal) Contracts: A Case Study using Simple Agreements for Future Equity, R. van der Meyden and Michael J. Maher, Oct 2022
  
  
• Architecture for Smart SAFE Contracts, R. van der Meyden and M.J. Maher. 3rd Conference on Blockchain Research & Applications for Innovative Networks and Services (BRAINS), Sep 2021. (This is an extract from the longer work "Can SAFE contracts be smart" below.)
  
  
• Simple Agreements for Future Equity -- Not So Simple?, Ron van der Meyden and Michael J. Maher, Manuscript (v2), Apr 2023
  
  
• A Game Theoretic Analysis of Liquidity Events in Convertible Instruments, Ron van der Meyden, arXiv:2111.12237, Nov 2021
  
  
• Can SAFE contracts be smart?, Ron van der Meyden and Michael Maher, Manuscript (Jan 2022)
  
  
• On Conversion of Multiple SAFE Contracts, Ron van der Meyden, Manuscript (Apr 2023)
  
  
• Building Smart SAFEs, William Coulter (UNSW Honours Thesis)