Our Investment in Phylax

The history of crypto is full of groundbreaking innovations, but it has also been dealt significant setbacks that have shaped the rate of progress our industry has experienced. One such setback was the 2022 hack of Nomad, a cryptocurrency bridge that allowed users to transfer tokens between blockchains. The consequences were immediate and devastating to those users and applications impacted.

For Odysseus, who was a part of the protocol team at Nomad, it was deeply personal. The experience hardened his resolve to ensure that such a catastrophe would never happen again. He became laser-focused on addressing the fundamental gaps in blockchain security, which, to this day, remains largely passive. With little real-time reactivity to prevent attacks in progress. His response? Phylax — a transformative solution for monitoring and actively mitigating hacks.

The Current State of Blockchain Security

Current blockchain security solutions, such as AI-driven vulnerability detection, fuzzing, and symbolic testing, often provide only probabilistic safeguards. Additionally, MEV-based strategies like front-running and next-block mitigation are insufficient in scenarios when the attackers use private mempools or execute single-block exploits. These solutions operate at the application layer, which means they have the same constraints that users and apps face. Phylax operates at the base infrastructure level, which removes these constraints and enables the network to detect and mitigate vulnerabilities in real time.

With over $3 billion lost to hacks, the limitations of current methodologies highlight the urgent need for a fundamental shift in how we approach blockchain security. Effective solutions must cooperate at the base layer, deliver deterministic guarantees, allow protocol developers to define specific security parameters, and scale efficiently to meet the increasing complexity of decentralized ecosystems. Enter Phylax.

The Phylax Credible Layer: A Novel Security Mechanism

At the heart of Phylax’s approach is the Phylax Credible Layer, a groundbreaking solution designed to actively prevent and mitigate hacks in decentralized applications. Key elements include:

1. State Oracle: This core primitive helps define and enforce protocol-compliant state transitions, enabling the detection of improper state changes that could lead to vulnerabilities.
2. Assertion Enforcement Mechanism: By incentivizing network participants (such as sequencers, block builders, etc.) to act as security enforcers, the system proactively defends against malicious transactions by defining possible state transitions that must not be reached (assertions).
3. Proof of Possibility (PoP) and Proof of Realization (PoR): These cryptographic proofs are designed to verify both potential and realized vulnerabilities without revealing the exploit itself, offering an efficient method to identify and respond to threats.
4. Economic Incentives: Phylax aligns the interests of participants through incentives for Assertion Adopters (dApps), Assertion Enforcers (block builders, sequencers, etc.), Assertion Submitters (security researchers), and Assertion Consumers (any user). These incentives form a self-sustaining ecosystem where participants are rewarded for maintaining a robust, security-focused ecosystem of supported applications.
5. Modular Architecture: The Credible Layer is designed to integrate seamlessly with existing rollup solutions and could potentially extend to Layer 1 networks.

The Credible Layer also introduces new economic models, such as integration with restaking protocols and security bond markets, designed to enhance capital efficiency while providing an additional layer of security.

Reimagining Blockchain Security with Phylax

At Figment Capital, we believe that distributed trust is a cornerstone of any decentralized system. The staggering $3 billion lost to hacks underscores the dire need for more advanced, proactive security solutions. Phylax’s mission aligns perfectly with our conviction that blockchain infrastructure must evolve to support the needs of institutional capital and mainstream adoption. By providing DApps with the tools to monitor their security posture and actively defend against attacks, Phylax is restoring confidence in a decentralized future.

Odysseus’ journey from the Nomad hack to founding Phylax is a testament to his resilience, vision, and commitment to fixing one of the industry’s most significant pain points. His unique insight into blockchain vulnerabilities, coupled with the novel architecture of Phylax, convinced us that this is a founder and a company that can transform the way decentralized applications are secured.

Phylax’s combination of real-time monitoring, proactive transaction reverts, and modular architecture offers a new standard for the industry. As the blockchain space continues to grow, the Credible Layer’s potential to scale across networks and integrate with rollups is unparalleled. We believe Phylax is not just mitigating risk — it is building towards a more secure and trustworthy decentralized future.

For these reasons, we proudly co-led Phylax’s pre-seed round with Nascent and are excited to partner with Odysseus and his team as they bring their vision of proactive, robust blockchain security to mainnet. Collectively, the industry and its security researchers can ensure that hacks become a relic of the past, as the next generation of blockchain applications deploy with confidence, security, and credibility.