Brooklyn, New York-based startup Entropy has raised a $25 million seed round led by Andreesen Horowitz (a16Z). The venture capital firm recently announced the launch of its $4.5 billion cryptocurrency fund reserved exclusively for blockchain-based projects.
Crypto asset firm Entropy, founded by self-taught cryptographer and trans activist Tux Pacific, also saw participation from Dragonfly Capital, Ethereal Ventures, Variant, Coinbase Ventures, Robot Ventures, Inflection and the Komerabi Fund. Celebrated angel investors from the tech community, including Naval Ravikant, Sabrina Hahn and James Prestwich, also participated in the round, according to Entropy.
Unlike centralized crypto custodians such as Fireblocks and Coinbase, Entropy is well rooted in the founding principles of crypto and its core value of decentralization. The company aims to usurp the standard business model of crypto custodians that store assets for crypto users in a centralized manner and are replicating the model of banks.
Recently the practice of holding users’ private keys at a central location has left these custodians at the mercy of hackers, with millions being lost in crypto assets. According to a CNBC report, cryptocurrency theft rose 516 percent from 2020 to $3.2 billion worth of cryptocurrency. Of this total, 72 percent of stolen funds were taken from Defi protocols. Losses from scams climbed 82 percent to $7.8 billion worth of cryptocurrency.
Entropy aims to topple the standard business model of centralized crypto custodians
Currently, Entropy is developing a decentralized custody platform that uses cryptographic techniques based on multiparty computation. The funds will be used to build the company’s leading embedded payment, card, lending and crypto solutions.
Furthermore, the fund would be invested in people and communities, continue its international expansion plans and strengthen strategic global partnerships. Before the seed funding round, the company had raised $1.95 million in pre-seed capital from Dean Eigenmann and Dragonfly Capital Partners on December 28, 2021.
Before founding Entropy, founder Tux Pacific was employed with NuCypher in Berlin, Germany, where he learned advanced cryptographic techniques. Using his knowledge from his previous experiences, he has been developing Entropy as a decentralized custody platform that uses sophisticated cryptographic techniques.
Entropy’s model will allow users to deposit digital assets across blockchain anytime. The company is working toward enabling the process of signing the user data cryptographically. Founder Tux Pacific compares the solution with Google Authenticator and has claimed that before building a protocol, the company first worked on an ideal user experience for crypto to understand and develop a robust platform.
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