Ensuring trust in the trustless: why we invested in Lockchain.ai
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.
