Fordefi, a crypto wallet provider, has recently raised $10 million in funding with the aim of introducing its institutional-grade crypto wallet to retail platforms. The company intends to develop a user-owned self-custody wallet-as-a-service (WaaS) solution for exchanges, fintech platforms, and other centralized crypto services. This funding round, led by crypto VC firm Electrical Capital, also includes contributions from stablecoin issuer Paxos and Web 3 developer platform Alchemy.
Multi-Party Computation (MPC) for Enhanced Security
One of the key security features of Fordefi’s institutional wallet service is multi-party computation (MPC). Through MPC, users’ private keys are divided among multiple parties, making it significantly more challenging for hackers to compromise the security of the crypto wallet. This innovation aims to address the prevalent security concerns surrounding centralized exchanges and other crypto platforms.
In addition to MPC, Fordefi’s service incorporates transaction simulation, allowing users to preview the results of potential transactions before executing them on-chain. This feature enhances transparency and enables users to make more informed decisions regarding their crypto transactions. By providing this functionality, Fordefi aims to instill confidence in its customers, who have often faced issues and mistrust due to various security incidents and market volatility.
Fordefi’s WaaS has already attracted institutional clients such as Pantera Capital, DeFiance Capital, and Flare Network. These partnerships have resulted in an impressive $3 billion in on-chain transaction volume, highlighting the demand for robust security solutions within the crypto industry. The recognition and adoption of Fordefi’s institutional wallet service by established industry players further validate its efficacy and potential impact on improving security standards.
Tackling the Perceived Unsafety of Crypto
The timing of Fordefi’s mission to bring decentralized crypto custody to centralized platforms is apt, considering the ongoing concerns from regulators and skeptics regarding the safety of cryptocurrency. While fraud remains a significant risk, security breaches by hackers have proven to be a much greater source of losses within the community. In January of this year, hackers were responsible for looting $127 million in crypto, contributing to the rising concerns and highlighting the need for enhanced security measures.
Recent events have taught crypto enthusiasts some hard lessons. The collapse of Terra’s UST in May 2022 had a cascading effect on the industry, leading to the bankruptcy of major players like FTX/Alameda, Three Arrows Capital, and Celsius. Moreover, during the recession, several crypto platforms froze customer withdrawals, further fueling customer paranoia. These instances have highlighted the importance of self-custody solutions, as the saying in the industry goes, “not your keys, not your coins.” Users now understand the significance of holding their wallet keys themselves to ensure the security and ownership of their crypto holdings.
Centralized exchanges typically store crypto on behalf of their customers, introducing an inherent risk as the control is centralized. However, companies like Fordefi are striving to extend the reach of self-custody throughout the industry, aligning with the decentralized nature of cryptocurrencies. By providing institutional-grade security and empowering users with custody over their own crypto assets, Fordefi aims to reestablish the founding ethos of decentralization within the crypto space.
Fordefi’s institutional-grade crypto wallet introduces new and innovative security measures such as multi-party computation (MPC) and transaction simulation. The success and recognition garnered by Fordefi from institutional clients further validate the effectiveness of its security solutions. Additionally, the prevailing security concerns within the crypto industry, highlighted by recent security breaches and market volatility, emphasize the need for enhanced security measures. By embracing self-custody solutions and decentralization, Fordefi aims to uplift the trust and confidence of customers in the crypto ecosystem.