Sherlock raises $1.5M for new model to protect DeFi users from smart contract exploits

The pre-seed round was led by IDEO CoLab Ventures, with participation from A.Capital, Scalar Capital, DeFi Alliance and many strategic angels.

The Sherlock team is excited to announce that we have raised $1.5 million in funding to protect DeFi users from protocol hacks using in-house security analysis and platform-level coverage. The investment was led by IDEO CoLab Ventures, with participation from A Capital, Scalar Capital, and DeFi Alliance.

We’re also proud of the angel investors supporting our mission including: Alex Angel (Primitive), Alex Berto G (Aave), Chris Spadafora (BadgerDAO), David Truong (ex-Aave), Diane Dai (DODO), Don Ho (Quantstamp), Felix Feng (Set), Hart Lambur (UMA), Ivan Zhou (Niantic), 0xb1, Jasper de Gooijer (Flux), Jordan Momtazi (Synthetix), Josh Buckley (Product Hunt), Kain Warwick (Synthetix), Kerman Kohli (ARCx), Mariano Conti, Mark Borsten, Michael Ng (Unagii), Rajeev Gopalakrishna, Ric Burton, Richard Ma (Quantstamp), Sidney Powell (Maple), Sunny Aggarwal, Will Price and Zubin Koticha (Opyn).

Bringing an ambitious protocol like Sherlock to life takes a village. That’s why we made it our mission to partner with angels such as leading protocol founders, liquidity providers and security experts starting from Day 0 to bring DeFi to the masses. This support system has already made all the difference for Sherlock and will contribute to its success for years to come.

“Fundamental risk analysis and covering protocols directly is a heavy lift. 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.”

— Gavin McDermott, Partner at IDEO CoLab Ventures

Our Mission

We believe decentralized finance (DeFi) has a unique opportunity to become one of the most impactful societal goods in the 21st century. But it’s not guaranteed.

When we looked at the state of DeFi in 2020, we saw a burgeoning ecosystem with the potential to bring equality of financial access to billions of people. But DeFi was plagued by two problems: scalability and safety.

While many projects are working to solve the scalability problem, there are fewer new approaches to making DeFi safer. No approach has the ability to prevent 100% of exploits. That’s why we’re focused on managing the risks around exploits rather than aiming for 100% prevention.

We believe that by improving the safety of DeFi we’ll be able to help bring DeFi to new global participants.

Simplifying the UX for Managing Risk

As a user, managing risks related to exploits is a huge headache right now, and at times it’s not even possible. First, it requires using an entirely different protocol than the one you’ve deposited in. Then you experience some version of the following: hoping coverage is available (it’s usually not), hoping the pricing isn’t astronomical (it usually is), choosing the right amount of risk coverage (it’s usually impossible), and choosing the length of time you want coverage for (it’s usually wrong).

The steps for getting coverage through Sherlock are as simple as possible: there are no steps. 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.

Sherlock Protocol Design

Pricing Based on Risk Analysis

Sherlock actually does the work required to price risk as accurately as possible. Pricing based on historical trends doesn’t work because DeFi is so new. Pricing based on utilization means one side of the marketplace always gets a bad deal. And pricing based on supply and demand doesn’t scale on the supply side.

There’s only one way to truly understand the riskiness of a protocol: deep fundamental research. Sherlock aligns leading security experts with capital providers in a way that benefits both parties. Capital providers see the incentive alignment and feel comfortable delegating their capital to security experts. And security experts benefit from the scale at which their analysis has impact, creating very large incentives for a job well done.

Partner With Us

If our mission and values make sense to you, we’d love to figure out how we can work together.

If you’re a protocol that wants to join our waitlist (or test drive us at no cost), feel free to reach out.

If you’re a potential liquidity provider (big or small), we’d love to hear from you.

If you’re interested in keeping DeFi safe on the security side, we’d love to chat whether you’re a seasoned expert or you’re just getting started on your journey.

Otherwise feel free to follow our progress on Twitter!

We’re Hiring!

We’re actively looking for people who get as excited as we do about bringing DeFi to the masses. We like to remind ourselves of a simple idea when looking for new teammates: no one at Sherlock would have been hired by a startup for the job they do now.

If you’re a first principles thinker who moves with urgency but cares about getting the details right, feel free to reach out no matter what your Web 3.0 proficiency is. We’re confident you can make an impact at Sherlock.

-Jack and Evert, co-founders of Sherlock



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SHERLOCK is a risk management platform designed to keep end users protected by providing affordable and scalable coverage to protocols.