Modulus secures $6.3 million in funding to enhance AI with crypto security

  • Modulus Labs, a venture integrating artificial intelligence and cryptocurrency, secured $6.3 million in a seed funding round.

Modulus Labs, a groundbreaking project merging two of the most hyped technologies in the venture world, has triumphantly secured $6.3 million in a successful seed round. Variant and 1kx are proud backers of this innovative venture, as announced on Wednesday.

The genesis of Modulus Labs can be traced back to the prestigious halls of Stanford University, a familiar starting point for many successful startups. Co-founder Daniel Shorr, driven by the allure of the crypto space during the pandemic, spearheaded the inception of Modulus. Distinct from others captivated by trading screens, Shorr and his co-founders delved into crypto whitepapers, with a keen focus on zero-knowledge cryptography.

Speaking confidently from their WeWork office surrounded by pink sticky notes, Shorr shared, “We found ourselves in a position to marry the two.” The core idea behind Modulus revolves around the use of zero-knowledge proofs, a cryptographic technique validating integrity without exposing underlying raw information. Shorr aptly likens this approach to a “blue checkmark” for artificial intelligence systems, drawing parallels to the validation symbol on social media platforms like Twitter.

Modulus strategically positions itself in a market where the line between real and generative artificial intelligence is increasingly blurred. Recent headlines highlighting the use of deepfakes to influence public opinion underscore the urgency of such innovations. Modulus, leveraging ZK-proofs, specifically zkML, aims to provide users with the assurance that AI queries remain unaltered or tamper-proof. This breakthrough paves the way for a broader range of web3 applications to seamlessly incorporate AI while maintaining the highest standards of security and reliability.

Bridging a gap between AI and blockchain

According to Variant General Partner Jesse Walden, the project adeptly addresses the opacity of machine language models on servers by seamlessly integrating the transparency of blockchain. This strategic move facilitates the development of more advanced decentralized protocols, effectively reducing the necessity for human governance over intricate and dynamic functions.

In practical terms, the project’s significance is substantial. It elevates decentralized applications (dApps) to a level comparable to their centralized counterparts, introducing recommendation and matching algorithms to the Web3 environment. A recent Medium post by the project articulates its potential impact, stating, “It brings dApps closer to parity in terms of features to their centralized counterparts, bringing recommendation and matching algorithms to Web3.”

Moreover, the project demonstrates versatility in its applications. For instance, it can enhance NFT marketplaces by tailoring experiences to individual wallet owners based on their existing NFT holdings. The project can also serve as a reliable, automated Oracle for verifying off-chain data. Notably, it opens up new possibilities that were previously unattainable without on-chain AI support, a prospect the project finds particularly exhilarating.

Beyond these functionalities, the project offers opportunities to enhance tokenomics, allowing contributors to be compensated in tokens for improving on-chain models. Furthermore, it presents unconventional prospects, such as the concept of a decentralized autonomous organization driven by AI. While this idea might seem ambitious, especially considering governance challenges, Walden emphasizes its feasibility.

Walden highlights the potential transformative impact on the decentralized lending market, envisioning the utilization of artificial intelligence to manage loan collateralization ratios. This shift from traditional human decision-making in crypto lending could significantly enhance efficiency and reliability in the lending process.


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