A decentralized finance protocol (DeFi) called Sherlock secured a funding round for a project that aims to protect users from the growing trend of exploits and hacks.
The $ 1,5 million round was led by IDEO CoLab Ventures, with the participation of A.Capital, Scalar Capital and DeFi Alliance. A number of angel investors from the main DeFi protocol also joined the investments.
The Sherlock platform addresses the growing problem of smart contract vulnerabilities by offering protocol hack protection using internal security analysis and platform-level coverage.
According to the announcement, IDEO CoLab Ventures Partner Gavin McDermott said fundamental risk analysis and direct hedging protocols were "a heavy task," adding:
"But if Sherlock's model can scale up to a significant percentage of TVL in DeFi, their network will significantly improve security for the entire industry."
Add a safety net
Sherlock aims to focus on managing the risks associated with exploits rather than aiming for 100% prevention, he said. Managing risk related to exploits is a huge headache for DeFi users as it often requires using a completely different protocol than the one they deposited into.
“Sherlock enables exploit protection built into the protocols you're already using. This means no headaches for users and DeFi can get much closer to mass adoption ”.
The protocol acts as an intermediary to price risks using thorough fundamental research. Align leading security experts with capital providers in a way that will benefit both sides.
Collateral or liquidity providers see the alignment of incentives and feel comfortable delegating their crypto assets to security experts. Security experts can benefit from the scale at which their analysis impacts, the blog post explained.
Further details on the technical aspects of the platform were scarce, as was the launch date.
DeFi exploits are on the rise
This year exploits and hacks in the DeFi sector have exploded. At the moment, Binance Smart Chain (BSC) appears to be the epicenter of the chaos.
BSC itself said the wave of attacks was organized and targeted. This is not surprising considering that most of them are clones and many are not certified. Additionally, Binance has been churning out these DeFi farms and projects at an unprecedented rate to gain an edge over its rivals, namely Ethereum (quotation).
In late May, blockchain intelligence firm CipherTrace announced analytical support for BSC as exploits increased. 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 his work cut out if he is to successfully stem this tide.
