Why we love CertiK: High grade, unbreakable blockchain security set to dominate a $1.8 trillion dollar market.
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Quick highlights: Five key factors that sealed the deal
- Solving a multi-trillion-dollar challenge. At current rates of smart contract deployment and aiming for 20% of testing infrastructure market share, CertiK are set to dominate a potential $1.8 trillion market within a few years.
- Revolutionary multi-platform technology that is ready to be used. The CertiK team have already developed the Certik Beta Version, with the launch of Certik 1.0 available within a month’s time.
- An all star team with a strong track record of success. Founded by an all star team of scientists from Colombia and Yale, and supported by senior software engineers from Google, Facebook and FreeWheel.
- A step change in technical capability vs. rivals like Quantstamp and Zeppelin. The only team who has successfully verified systems as complicated as concurrent OS kernels. A clear USP that will rapidly outstrip the competition.
- An aggressive roadmap and groundbreaking partnerships. A live alpha product with the CertiK 1.0 launch in June 2018, and close to securing some mind-blowing partnerships (targeting 30 commercial partners by the end of June 2018).
Deep dive into why we love CertiK and the problem that it is trying to solve?
We have been in dialogue with the CertiK team for many weeks, undertaken extensive due diligence and have identified multiple factors that excite us about this project. In this article we will focus on the highlights listed above to hammer home the core points about what makes CertiK so exciting. If you care about enabling blockchain security and in turn removing a major barrier to growth and adoption then you need to read on. What follows is an executive summary of top 5 reasons why we decided to partner with CeriK:
1. Solving a multi-trillion-dollar challenge. At current rates of smart contract deployment and aiming for 20% of testing infrastructure market share, CertiK are set to dominate a potential $800 trillion market within a few years.
The blockchain market cap was as low as $14 billion at the end of 2016 before it exploded in 2017 and hit $300 billion by the end of 2017. In this time Ethereum smart contracts on the blockchain rose from 0.1 million to 1 million. This is a growth rate of 900% in just 12 months, and has shown no signs of slowing down.
Blockchain hacks are on the way to costing trillions of dollars and there is a huge gap in the market for a dominant blockchain and smart contract security system. CertiK have developed a revolutionary decentralized proof engine that acts as a shield to mathematically ensure that the blockchain ecosystem is bug free, hacker resistant and totally secure.
In CertiK we have found what we strongly believe to be the solution that will secure trillions of dollars worth of on-chain and off-chain assets and dominate a multi-trillion-dollar market for blockchain and smart contract testing and validation. This is a vital step in removing a major roadblock in the development of blockchain technology. Why?
In spite of rapid uptake in the use of smart contracts, blockchain implementations are still in their early stages and are very error-prone. As of 15th January 2018, Ethereum Virtual Machine implementation had 703 open issues (with 2,186 closed issues). Furthermore, public blockchain systems are based on trust and are open sourced and immutable once deployed. Any errors are therefore coded in, visible, and open to attack from hackers. Just one small bug in TheDAO smart contract cost $50 million and a hard fork was the only viable solution.
To end of year 2017, $630 million has been lost to hackers exploiting weaknesses in smart contracts. CertiK has the technology to totally eliminate hacks and hence build greater security and trust, allowing blockchain technology to flourish and garner further mainstream adoption. This is also a huge business opportunity for CertiK
Given the risk of hacks, and the danger they pose to the credibility and chances of success for any project, there is a strong demand for bullet proof code testing and validation. If the market continues to grow at current and expected rates, DApps and smart contracts are likely to reach 10 million in the next few years. At a lowballed average charge of $100,000 per smart contract, there is a clear $1 trillion market emerging as soon as one to two years from now (and keep in mind most other blockchain use cases are still many years away from being realised).
Throw in the fact that the CertiK platform covers a far wider market and offering than existing providers (thanks to certified DApp libraries and IDE plugins, with realtime and interactive verification feedback). This enables CertiK to replace existing testing infrastructure in turn shortening development cycles (saving clients money whilst simultaneously offering CertiK a new revenue stream).
Given that the average dApp costs around $1 million to build and testing and development infrastructure accounts for about 40% of that, if CertiK (or emerging competitors) libraries and plugins could account for just 20% of testing infrastructure that creates an additional market potential of $0.8 trillion (20% of 40% of DApps development costs, at an average cost of $1 million total development costs, multiplied by the forecast 10 million DApps).
Existing smart contract auditors charge several thousand to one million dollars and yet they are not offering a bullet proof solution. As we will see in section two, CertiK’s offering is light years ahead of anything else on the market and well positioned to dominate this huge market that will explode within the next couple of years.
2. Revolutionary multi-platform technology that is ready to be used. The CertiK team have already developed the Certik Beta Version, with the launch of Certik 1.0 available within a month’s time.
The CertiK blockchain solution is based on this underlying proprietary technology already being successfully applied. The white paper does an excellent job of giving a concise but detailed overview of the technology and I would encourage you all to read that — it’s impressive! We have picked out the highlights and will give you a run down of how the CertiK technology works when applied to blockchain and smart contract security. How it works:
- A CertiK client client submits smart contract or any other system source code to the CertiK network
- CertiK converts the code’s “correctness” into an analogous mathematical problem, breaks this problem down into segments and broadcasts to the CertiK network
- Decentralized CertiK nodes collaborate to solve these mathematical problems in exchange for rewards.
- The solutions found by the nodes are summarised on the CertiK blockchain and can be used at any time to validate the proof itself
- CertiK assembles these solutions into a certificate for the original problem which is sent back to the client.
- The certificate will either validate that the code is bug free and hacker resistant, or highlight potential risks and loopholes.
- In the latter case the certificate will offer examples of how errors or weaknesses could be exploited
CertiK utilises, but is not limited to, blockchain technology. Furthermore, whereas Bitcoin’s hash function wastes a lot of electricity, CertiK converts excess hash power into reusable long-term value. Excess computational and proof power can also be used to serve as a shield to protect off-chain assets, such as self-driving cars.
This is a technology created by some of the brightest minds in the business and backed by some serious funding.
3. An all star team with a strong track record of success. Founded by an all star team of scientists from Colombia and Yale, and supported by senior software engineers from Google, Facebook and FreeWheel.
These previous successes indicate that the CertiK techniques can be revolutionary to blockchain ecosystems by making them truly reliable and secure. They also suggest that the people behind the technology are extremely capable.
However, whilst it’s impressive to see the work done by these eminent Yale scientists, we make sure to dig deep into their individual backgrounds to ensure that we are partnering with a team that not only has the brains, but also the business acumen, to deliver. In this case we were blown away by what we discovered.
Founded in Silicon Valley and New York City, the team consists of world-class formal verification experts who are professors from Yale University and Columbia University. Many of their highlights and achievements have been covered in the previous section, and we will let their profiles speak for themselves:
This founding team is supported by senior software engineers from Google, Facebook, and FreeWheel. This team is currently being expanded to up to 20 software engineers and research scientists in order to deliver on the aggressive roadmap, detailed in the final section of this article.
4. A step change in technical capability vs. rivals like Quantstamp and Zeppelin. The only team who has successfully verified systems as complicated as concurrent OS kernels. A clear USP that will rapidly outstrip the competition.
We’ve got a great market, a well developed prototype product and a great team. However, we’ve already noted that there is competition on the market. We only want to partner with the businesses that have the clear potential to be the number one market leader in their category. So, we took a deep dive into the competition to see how CertiK stacked up vs. the contenders.
Quantstamp: This is an existing verification protocol for smart contracts written in Solidity (the native language of Ethereum). It relies on traditional model checking techniques that requires intensive amount of human effort in reviewing source code and writing manual specifications. Therefore, this opens the system up to human error and limits the scalability of this solution. It is also unclear how their solution would extend to verify more complex systems like the blockchain itself (which is something that CertiK is capable of). In spite of these limitations Quantstamp’s market cap has risen as high as $475 million (although currently circa $90 million).
Zeppelin: This is a testing and verification service provider that currently dominates a large proportion of the market. Yet again, most of their current verification services are done manually. They do also develop a widely used open-source framework for smart contract development, called OpenZeppelin. However, their libraries are neither verified nor to they offer mechanized proof objects. Therefore, in terms of human error risks, scalability and scope they too fall short of what CertiK is capable of.
Runtime Verification: This is a traditional formal verification company that now also provide verification services for smart contracts. They have similarities to CertiK in that their team have a strong academic background and they have also proposed a solution for EVMs (Ethereum Virtual Machines), named KEVM. However, their work is still at research stage with little evidence of how their techniques can be applied to large scale, industry-grade systems.
Whilst CertiK are not operating in a bluewater market, there are clear flaws and limitations amongst their primary competitors. There are also clear advantages of the CertiK solution in terms of automation, scalability and complexity (e.g. ability to secure not just smart contracts, but also complex systems such as blockchains).
CertiK will need to move fast to prove their claims and gain market share before the competition catches up. However, based on their progress to date and with the aggressive technical and business roadmap detailed in the next section, we are confident that CertiK will be regarded as the market leader before long, taking substantial market share from legacy operators.
5. An aggressive roadmap and groundbreaking partnerships. A live alpha product with the CertiK 1.0 launch in June 2018, and close to securing some mind-blowing partnerships (targeting 30 commercial partners by the end of June 2018).
As we have already highlighted, CertiK have made substantial progress over the last few years and are well positioned to move to their next stage of evolution. As we know only too well, past performance is not necessarily an indication of future success. Therefore, before partnering with any project we will perform a rigorous audit of the roadmap and deliverables. We know that developments from 2015 to 2017 have been a success, but what does the future hold for CertiK?
The proof of concept started in December 2017 and things are moving fast. The alpha smart labelling and layered verification product was launched in February 2018, and is being tested and improved by an online community established by the CertiK team.
The beta product is scheduled for May 2018 and CertiK are targeting ten commercial partners by this stage. The aim is to expand to thirty commercial partnerships in time for the launch of the initial full product launch (CertiK 1.0) in June 2018, with the public release in the second half of 2018.
We’re expecting some very exciting announcements from the team in due course. We are dealing with a serious organisation with a proven track record, that will have a live product and major partnerships within months and look set to go from strength to strength.
To date we’ve not heard many in the community talking about CertiK, but we’re confident that will change when the industry clocks on to this phenomenal project. It’s got all the right ingredients to be a huge, long-term success, remove a major roadblock in blockchain development and in doing so, to dominate the blockchain and smart contract security market within a very short space of time.
We are extremely confident that we are dealing with a very credible operation that has been in stealth mode over the last few years. They have had great success and positioned themselves to take the blockchain security market by storm. CertiK have passed our rigorous audit and evaluations and passed every test with flying colours and we are of the opinion that we have unearthed another gem. This is the sort of project we get very excited about, and we look forward to working with CertiK.
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Torque Ventures and its affiliates do not provide investment, legal or accounting advice. This material and opinion above has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, investment, legal or accounting advice.