Why We Invested: CertiK

At AU21 Capital, we are excited to announce our recent backing of CertiK, a novel approach to auditing, perpetually securing and insuring capital withheld in any blockchain. CertiK decentralizes these three processes to build a far more robust capital protection system that removes the shortfalls of current security solutions.

As Crypto Booms, Security Stagnates

With hundreds of Billions of dollars in existing cryptocurrency in circulation, it comes as no surprise that a substantial amount of on-chain assets have become lost, stolen or unretrievable through the passage of time. Through security breaches, ledger failures and lapses in code, tens of Billions invested in digital assets have been compromised, and traditional insurance product offerings have clearly failed to evolve in tandem with the cryptocurrency environment.

CertiK — A Decentralized Alternative to Insurance

CertiK modernizes and reduces the risk of an unprotected loss of principal by decentralizing and thoroughly vetting the claim process from start to finish. An abridged version of CertiK’s underwriting and payout process is described below.

After a comprehensive audit has examined the security of a product, CertiK integrates an Oracle feature into the project to dynamically evaluate the security of the underlying chain, and quantify their findings into a score out of one-hundred.

From there, users of a client chain may purchase Shields, collateralized in full by liquidity pools, for a fee to protect their assets for a defined amount of value and time. Shields remain available for purchase until the value of outstanding shields reaches the value of the underlying collateral, and in-turn, the fees gathered from shield sales are distributed pro-rata to collateral pool contributors.

When claims arise, on-chain voting occurs to determine whether coverage is warranted and within the scope of the purchased shield, and if approved, payouts occur as determined by the protection provisions of the shield.

CertiK’s CertiKSheild system is far from a concept, and as of October 2020 the firm secures upwards of $18 Million in digital assets across 76 projects. We are impressed with the level of adoption that CertiK has already garnered in industry, and are highly optimistic for further growth in CertiK’s solutions to security and insurance as they set a new standard for transparency and safety in the cryptocurrency space.