Blockchain companies have recognized a growing need for security as cryptocurrency markets and DeFi become more profitable.
CertiK, a global blockchain security firm, has completed a $80 million investment round led by some of the industry’s largest venture funds, putting the company on track to reach the lofty $1 billion valuation mark in the near future.
CertiK announced Wednesday that the Series B2 investment round was led by Sequoia, a California-based venture fund, with participation from Tiger Global, Coatue Management, and GL Ventures.
In the startup world, Series B or B2 financing refers to a company’s second round of funding from either private equity or venture capital. CertiK has now raised more than $140 million in the last four months, bringing its valuation closer to $1 billion, according to the company.
According to company co-founder professor Ronghui Gu, the cash infusion will be used by CertiK to further expand its product suite, particularly in the software-as-a-service, or SaaS, market. The company is currently working on new SaaS products centered on security auditing, formal verification, and client blockchain and smart contracts protection.
CertiK’s revenue has increased 20 times in the last year as more blockchain companies seek to protect their infrastructure from active threats. According to Professor Gu, the growing demand for security services is a result of increased crypto adoption and industry innovation. “Rapid development to market for these [crypto] projects exposes them to exploits and attacks,” he explained, adding that “securing these projects against such exploits is — more than ever — an important element of the project development process.”
Blockchain and smart contract auditing, which Professor Gu described as a “rigorous process that involves [a] review of the code implementation” before a project is launched, is a critical component of securing these emerging networks. He went on:
“Code is law in the blockchain world, and it enforces transaction logic. However, code implementation is untrustworthy and may contain bugs that lead to vulnerabilities. As an example of a vulnerability, consider […] Consider the DAO exploit, which is linked to a recursive pattern vulnerability and resulted in a $150 million hack.”
Decentralized finance, or DeFi, appears to have increased the risk that blockchain companies and users face in this rapidly evolving market. DeFi has become notorious for multi-million dollar exploits, token distribution bugs, and unanticipated errors. In the year through November, we documented 169 blockchain hacking incidents, resulting in nearly $7 billion in lost funds. DeFi exploitation was all too common.
As more users experiment with these novel protocols, security flaws remain a critical point of failure for DeFi projects. The DeFi market is now worth more than $275 billion in total value locked, having grown at an exponential rate since mid-2020.