A decentralized finance (DeFi) protocol called Sherlock has secured a funding round for a project that aims to protect users from the increasing trend of exploits and hacks.
The pre-seed round which raised $1.5 million was led by IDEO CoLab Ventures, with participation from A.Capital, Scalar Capital, and DeFi Alliance. A number of angel investors from leading DeFi protocol also added to the investments.
The Sherlock platform addresses the increasing problem of smart contract vulnerabilities by offering protection from protocol hacks using in-house security analysis and platform-level coverage.
According to the announcement, Gavin McDermott, Partner at IDEO CoLab Ventures, said that fundamental risk analysis and covering protocols directly was “a heavy lift” adding:
“But if Sherlock’s model can scale to a meaningful percentage of TVL in DeFi, their network will significantly improve safety for the entire industry.”
Adding a safety net
Sherlock aims to focus on managing the risks around exploits rather than aiming for 100% prevention, it stated. Managing risks related to exploits is a huge headache for DeFi users as it often requires using an entirely different protocol than the one they have deposited in.
“Sherlock enables built-in exploit protection with the protocols you’re already using. This means no headaches for users and DeFi can get that much closer to mass adoption.”
The protocol acts as an intermediary in order to price in the risks using deep fundamental research. It aligns leading security experts with capital providers in a way that will benefit both parties.
Collateral or liquidity providers see the incentive alignment and feel comfortable delegating their crypto assets to security experts. The security experts can benefit from the scale at which their analysis has impact, the blog post explained.
Further details on the technicalities of the platform were thin on the ground as was the launch date.
DeFi expliots surging
There has been no end to the exploits and hacks seen in the DeFi sector this year. At the moment, Binance Smart Chain (BSC) appears to be the epicenter of the chaos.
BSC itself claimed that the wave of attacks was organized and targeted. This is not surprising considering most of them are clones and many are unaudited. Additionally, Binance has been churning out these DeFi farms and projects at an unprecedented rate in order to get an advantage over its rivals, namely Ethereum.
In late May, blockchain intelligence company CipherTrace announced analytics support for BSC as the exploits mounted up. The list of exploited BSC protocols is growing and currently includes PancakeBunny, Cream Finance, bEarn, Bogged Finance, Uranium Finance, Meerkat Finance, SafeMoon, Spartan Protocol, and the most recent Belt Finance.
Sherlock will have its work cut out if it’s to successfully stem this tide.