The DeFi industry has grown in leaps and bounds witnessing numerous activities and pooling massive trading volume on a daily basis. But alongside this steady growth is the increase in challenges, the majority of which borders on the security of DeFi protocols. Decentralized Finance began gaining traction in mid-2020, and in 2021, the momentum has doubled. Since last year, shocking reports on DeFi protocols’ exploits have been emerging, stunting the expected growth of the space.
While investors and crypto enthusiasts gladly abandon the legacy system for the benefits of DeFi, they still tread the space with caution as it is largely unregulated. Essentially, security is the missing piece in the large puzzle of DeFi. As much as there are insurance protocols set up to compensate users in the event of a breach in a protocol’s security, these measures are somewhat reactive and users are not likely to get full compensation for their stolen funds.
Emerging protocol, Hats.finance is aimed at filling the security vacuum in DeFi with its decentralized cybersecurity network. Hats is introducing pre-emptive measures, which will help detect the vulnerabilities in DeFi protocols even before they are discovered by bad actors.
Hats will feature a synergy among community stakeholders comprising hackers, projects core developers and token holders with one goal in mind- to preserve the integrity of Decentralized Finance, which is necessary for its continuous growth. Activities within the Hats ecosystem will also revolve around its native and governance token, Hats Token, which can be used by community members to take voting decisions on the protocol.
VC Firms, Greenfield One and Lemniscap Lead Hats $3.5m Seed Round
In support of its project, Hats raised $3.5 million during its seed round from prominent investors who share the same view of security being a linchpin for the expansion of DeFi. Hats’ seed round was led by Greenfield One and Lemniscap with participation of Spartan Capital, Accomplice, Collider Ventures, IOSG Ventures and a host of others. Collider Labs provided initial capital and development support.
The funding will be committed towards setting up a solid infrastructure for Hats and also establish its first bug bounty vault that will reportedly hold $100k in Circle’s USD (USDC). Hats’ bug bounty program is part of its pre-emptive security measures as it seeks to reward community members for their efforts in detecting bugs in the protocol’s code.
How Hats’ Bug Bounty Program Works
Entitled Protocol Protective Mining (PPM), Hats bug bounty initiative will incentivize community participation to secure the protocol while farming Hats tokens in the process. So the report system ensures that the vulnerability disclosed and the identity of the hacker who reported the bug are both protected.
Hats will adopt a unique on-chain timestamp commitment and off-chain encrypted communication mechanism to facilitate the disclosure process. An NFT-rewarding system will also be introduced in Hats’ bug bounty program, where prolific NFT artists will be invited to mint unique NFTs as rewards alongside those of the vaults.
Security is paramount in DeFi and before it can continue to make giant strides as it moves towards mainstream adoption, stakeholders in the industry have to combine efforts in pushing for strong security measures. This is what Hats.finance is pioneering through its cybersecurity network.
Hats is one of the first cybersecurity protocols incentivizing white hat hackers to gear mainstream DeFi adoption. It aims to replace the demons of malicious hacks and attacks with ethical hacking techniques that can not only incentivize the skills of the hackers but also helps in building a secure and robust DeFi ecosystem.
Hats.finance is the idea of a team of experts with significant experience and exposure in crypto and cybersecurity. The Dev team includes –, formerly a part of the Prysmatic Labs team, which implements a popular ETH 2.0 Client, and a former R&D manager at DAOstack and a smart contract security auditor.