Announcing our investment in Lockchain.ai
White Star Capital Digital Assets Fund - newsletter #165
Ensuring trust in the trustless: why we invested in Lockchain.ai
White Star Capital Digital Asset Fund - newsletter #165
By Sep Alavi, General Partner, Cameron Coombes, Vice President, and Marthe Naudts, Associate
Blockchain protocols and decentralised applications promise two things:
asset security through distributed consensus mechanisms,
and user sovereignty through self-custody.
Combined, these features provide users with enough trust to lock their assets in public-facing smart contracts, and the ability to look after their own assets.
However, in reality, given the immutability of blockchain ledgers and limited insurance and recovery options available, users are keenly aware that they may lose permanent access to their assets. In 2023 alone, incidents like Euler Finance’s $197m hack and Curve’s $74m hack meant a total of $1.3bn was lost to cyber attacks in both economic and smart contract exploits as well as social engineering tactics like phishing, scams, and rug pulls.
No long-term or institutional adoption is possible with this state of affairs.
In other words, the biggest roadblock to trustless systems is that they need to be trusted.
Several point solutions have emerged. Take audits as an example. Protocols have several manual service offerings, as well as emerging automated auditing and so-called ‘fuzzing’ solutions.
Or take monitoring systems. Many start-ups have raised capital to build software solutions offering live monitoring solutions which alert a protocol and its users once a hack or suspicious activity has occurred. The best of these offer automated responses to communicate with users once the hack or suspicious activity has occurred.
There are other decentralised options too, which crowd-source white-hat hacking and audits, as well as build a distributed network of bots to identify phishing attacks and oracle exploits.
However, we’ve been looking to back a team developing an end-to-end solution that not only audits and monitors systems, but also intervenes directly in exploits with a pre-approved automated response, and then manages post-exploit communication and payouts.
Enter, Lockchain.ai
Lockchain.ai is the world’s first AI-powered risk management platform for blockchain, integrating real-time data analytics, monitoring, and automated response technology. The platform includes a live view of risk status, notification of important events on and off-chain that may impact portfolios, predictive impact analysis of contagion risk, and, soon, an automation engine to respond to events with pre-built playbooks.
Lockchain.ai has two layers to its platform’s architecture: the observation and detection layer, and the response layer.
The platform constantly observes and monitors smart contracts, wallets, and transactions to actively detect fraud, known threats, and vulnerabilities. They ingest, parse, and normalise transaction and behaviour data from both Web2 (AWS, GitHub, Discord) and Web3 (EVM and Solana). They then quantify the risk to their customers’ digital assets in real-time with an automated intelligence engine, combining threat intelligence and business impact. Customers can opt into real-time alerts through Slack or Telegram, enabling a fast reaction time, as well as live impact analysis to drive their response selection.
Combined, this creates a uniquely end-to-end threat monitoring and response platform, that services anyone holding crypto assets and cross-platform positions — meaning both protocol developers as well as trading and hedge funds.
This is a crucial, and much-needed, tool for crypto asset managers, traders, hedge funds, regulators, and others who trade or hold crypto assets, as it provides the intelligence necessary to understand the risks that affect their portfolio continuously and in real-time.
As they emerge from stealth after a year of development, we’re proud to announce our investment in Lockchain.ai’s $5m seed round alongside Lerer Hippeau, Arrington Capital, Arca, and RSE Ventures.
🔦 White Star & Portfolio Spotlight
Dfns has brough threshold signatures to Starkware
Dfns’ research team open-sourced a Rust implementation of the STARK curve to give developers building applications on Starkware free access to state-of-the-art MPC and threshold signatures.
$ALEX is now available in ERC20 and is trading on Uniswap
[TEXT]ALEX on EVM is now live.
Thala featured on Bankless analysis notes
"Overall, Thala has positioned itself as the center of DeFi on Aptos thanks to its holistic suite, strong hold on TVL, and supportive Foundry."
Spartan Capital leads $10 million strategic funding round for Bitcoin DeFi developer ALEX
ALEX leverages Layer 2s, bridges, oracles and other infrastructure to create a Bitcoin-specific decentralized finance layer.
🏦 Enterprises & Institutions
21Shares launches Toncoin staking ETP on SIX Swiss Exchange
Dubbed TONN, the ETP has been launched on the SIX Swiss Exchange, where 21Shares already offers several other crypto products.
HSBC launches retail tokenized gold products in Hong Kong
The HSBC Gold Token is built with the bank’s digital asset platform, HSBC Orion.
Paxos, Hashnote partner for PayPal stablecoin and USYC token integration
The partnership between Hashnote and Paxos will facilitate a “two-way atomic settlement process” that allows for instantaneous conversions between the yield-bearing USYC token and PayPal’s stablecoin.
WisdomTree granted trust company charter to offer crypto-related services in New York
The charter enables the asset manager to offer crypto-related services in the state of New York, joining firms such as Coinbase, Gemini and Fidelity Digital Assets.
⚖️ Government & Regulation
Phillipines regulators take steps to block Binance
The top securities regulator in the Philippines revealed on Monday that it is working with the NTC to block access to Binance.
No, the EU is not banning self-custodial crypto transactions or wallets
Incorrect reports that the EU is set to ban anonymous crypto wallets and self-custodial payments went viral over the weekend.
House GOP: SEC must first decide if ETH is a security for Prometheum to custody it
Prometheum wants to offer ether custody, sparking regulatory debate.
UK Treasury publishes new report on fund tokenization
The report explores the use of tokens as collateral for money market funds, and the role tokenized funds play in the onchain investment market.
💰 Funding & Exits
Square Enix backs $14 million seed round for web3 gaming firm Elixir Games
Elixir Games will use the funds to develop its gaming ecosystem and launch the $ELIX token undergirding its gaming products.
Web3 AI platform MyShell raises $11 million in a round led by Dragonfly
The web3 AI platform allows creators to generate AI agents or bots and plans to launch its token.
Modular blockchain developer 0G Labs raises $35 million in pre-seed funding
The modular blockchain project is building a data availability system focused on decentralized AI applications.
Crypto casino MyPrize raises funds at $140 million valuation from Dragonfly and others
MyPrize, an online crypto casino supporting multiplayer games, has emerged from stealth with $13 million in funding.
Borderless Capital acquires quant firm CTF Capital, plans LatAm HQ in Argentina
Assets managed by CTF Capital will be folded into Borderless Capital’s $100-million flagship hedge fund
DePIN Layer 1 peaq raises $15 million in pre-launch funding
The funding will be used to expand the peaq ecosystem of decentralized physical infrastructure networks ahead of a public offering and mainnet launch.
Reya Labs Raises $10M in Funding to Enhance Development of Trading-Optimized Layer 2 Reya Network
Reya Network’s design aims to offer deep liquidity, efficient capital utilization, and high performance, serving the needs of decentralized finance (DeFi) traders and liquidity providers.
Reshaping Mobile Gaming: BlockGames Sets New Standard for Data Ownership and Privacy with $6M Funding Secured
BlockGames Introduces Universal Player Profiles for Real-World Rewards, empowering players and solving user acquisition problems for games.
🚀 Project Launches & Updates
Outlier Ventures and Saudi Arabia's NTDP announce web3 accelerator program
The program aligns with the Saudi Vision 2030 plan for technological and economic diversification.
🔥 Other Bits We're Excited About
Tether looks to ‘build the next generation of open AI models’ with new data division
Tether has established a new AI division within the company, the stablecoin issuer announced Tuesday morning.
BlackRock’s tokenized fund 'brings legitimacy' to public blockchains like Ethereum, Bernstein says
BlackRock unveiled the BUIDL tokenized private equity fund earlier this month, deepening its foray into digital assets after launching a spot bitcoin ETF.