Crypto asset custodian Entropy announced Wednesday that it has closed a $25 million seed round led by Andreessen Horowitz.
Dragonfly Capital, Ethereal Ventures, Variant, Coinbase Ventures, Robot Ventures, Inflection and the Komerabi Fund also joined the round, according to a press release.
Entropy is developing a decentralized custody platform that uses sophisticated cryptographic techniques based on multiparty computation. The firm led by a self-taught cryptographer and trans activist named Tux Pacific, who self-describes as an anti-capitalist anarchist.
The company aims to upend the standard business model of centralized crypto custodians such as Fireblocks and Coinbase. The infrastructure around custody has “remain[ed] stagnant” since the launch of multi-sigs in 2017, it argues in the funding announcement.
Entropy’s protocol will aim to allow users to implement their own rules for interacting with funds, such as imposing time-gated constraints. Pacific told Techcrunch that although Entropy doesn't yet have a business model, the company remains confident in “building a great product before thinking through monetization.”
According to The Block Research’s 2022 Digital Asset Outlook Report, crypto custody firms focused on the institutional market experienced a significant upswing in funding in 2021, raising more than $3 billion.
In the report, Carlos Reyes and Greg Lim noted that the space will continue to grow as “traditional financial institutions such as BBVA, BNY Mellon, and U.S. Bank among others, enter or expand their digital asset offerings, including custody, either directly or by partnering with an existing custodian."
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