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Encryption startup NuCypher raises $10.7 Million in a simple agreement for future tokens (SAFT) from venture capital heavyweights, including Bitmain, Bitfury, Polychain Capital and others.
Innovative encryption startup NuCypher has raised about $10.7 Million in what is referred to as a Simple-Agreement-for-Token (SAFT) in a financing round led by Polychain Capital and Bitmain and included VC heavyweights Y Combinator, Bitfury, Arrington XRP Capital, Notation Capital, Coinfund and other strategic investors.
NuCypher’s token NU was purchased by the investors during the financing process. The $10.7 Million raised in NU tokens represents 8% of the total supply of the tokens currently in circulation. The investors further went into an agreement with the encryption startup to hold the tokens for two years while at the same time running nodes in a process referred to as “stake-locking”. Being the second series of financing, the total financing comes to around $15.825 Million worth $133 Million in terms of value.
NuCypher has a unique product. The product can store data securely on public blockchains using cryptography. The data stored with data providers aren’t safe from the custodian who stores it. What NuCypher does is essentially to provide an additional layer of security to the data with only the required permissions for access, retrieval, modification, and transfer.
This came to light in 2015 after NuCypher started assisting developers to be able to store data securely within their D’Apps (decentralized apps) on public blockchains. In a world where threats to privacy are increasingly becoming more sophisticated, the extra layer of security will change the way data is accessed, modified and managed especially in a world where there exist continual threats to public blockchains especially after hardforks.
NuCypher also indicated that the launch of its public testnet commences with immediate effect. NU tokens essentially act as a deterrent to Sybil attacks which can cause data intrusions and other undesirable effects once it has gone into effect. This is done via the staking of the nodes across the startup’s network thus preventing unvalidated nodes from coming up to also place a stake.
Maclane Wilkison who is Co-founder and CEO of NuCypher told Coindesk:
“The launch of our public testnet is the culmination of over two years of hard work to bring data privacy to dApps built on Ethereum and other public blockchains. The network is now fully implemented and ready to enter its final stress testing phase.”
This further shows the startups’ bias to the d’apps which are developed within the Ethereum ecosystem which has proven to be a first-generation blockchain that has brought the viability of dApps to the crypto space and the blockchain industry.
The distribution of the tokens will follow an innovative process that NuCypher refers to as a work-lock which is a form of stake-locking. In this model, those who wish to purchase the tokens put their base cryptocurrency tokens into an escrow smart contract. The number of base tokens staked may be used for any purpose but will get burned if they aren’t used for the original terms as dictated by the smart contract. As such, the holders of the tokens get incentivized to use the tokens as rewards in fresh network tokens for the original stake which has been received back provided they stick to the terms of the smart contract.
While this may sound like some “mafia-style” kind of arrangement, it also allows for the fidelity of the process and enables tokens to function according to definition thus avoiding regulatory issues that have been hitherto murky.