Modulus raises $6.3 million to bring crypto security to AI

Quick Take

  • Modulus Labs — a project marrying AI and crypto — has raised $6.3 million in a seed round. 

A project aiming to combine two of the venture world's most hyped technologies has successfully raised $6.3 million in a seed round, with backing from Variant and 1kx, the firm announced on Wednesday.

The project, known as Modulus Labs, traces its origins, like many startups, to Stanford University's prestigious halls. Co-founder Daniel Shorr — like many 20-somethings during the pandemic — couldn't resist the allure of the crypto space, and this led to the inception of Modulus. But unlike many of the punters drawn to trading screens, Shorr and his co-founders were diving through crypto whitepapers, with a specific focus on zero-knowledge cryptography.

"We found ourselves in a position to marry the two," Shorr told The Block from a tight WeWork office surrounded by pink sticky notes. 

The concept behind Modulus was to utilize zero-knowledge proofs, which offer a cryptography technique that enables the validation of something's integrity without exposing any additional underlying raw information. Co-founder Shorr draws a parallel, likening this approach to a "blue checkmark" for artificial intelligence systems, reminiscent of X (formerly known as Twitter). 

Indeed, Modulus is establishing its presence in the market as the boundary between what is real and generative artificial intelligence becomes increasingly blurred, with recent headlines highlighting the use of deepfakes to influence public opinion on the ongoing war in the Middle East between Israel and Hamas. Modulus, in particular, will harness ZK-proofs — specifically zkML — to offer users assurance that AI queries remain unaltered or tampered with, thereby paving the way for a broader range of web3 applications to incorporate AI.

Bridging a gap between AI and blockchain

As described by Variant General Partner Jesse Walden, the project is bridging a gap between the opaqueness of machine language models operating on servers and the transparency of the blockchain thus allowing "more advanced decentralized protocols by minimizing the need for human governance over complex, dynamic functions."