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Y Combinator's fresh batch of cypherpunks stars one Taiwanese startup aiming to fend off web 3 attacks with AI
Cybersecurity issues have never been more discussed in the history of mankind. As more companies attempt to deal with the massive influx of cyber security attacks, one startup is catching the attention of global investors. How does the Taiwanese-founded Chainsight help the world navigate troubled waters of web 3 scams?
According to a report from Chainanalysis, there has been about USD $3 billion in stolen cryptocurrency regarding web 3 projects in 2022. The total assets on these platforms are about USD $100 billion. “At this rate, 2022 will likely surpass 2021 as the biggest year for hacking on record,” concluded Chainanalysis in a twitter thread posted this October.
Echoing the cybersecurity trend, top accelerator Y Combinator (YC for short) is doubling down on crypto founders. Among its 2022 Winter batch, the percentage of web 3 startups have climbed to 13%, up from 6% of the prior Winter batch. This number is noteworthy in that the “startup kingmaker” YC is of benchmark importance in the startup investment field.
2022 is a great year for hackers, apparently. As crypto hackers walk away with heaps of stolen loot, however, people on the side of justice are not to be messed with, eagerly coming up with ways to fend off the attacks.
Data security is crucial to protecting modern businesses, so how exactly are aspiring startup founders tackling this problem? The answer is the almighty machine learning. Taiwanese-founded Chainsight aims to build an API background check system that detects and prevents crypto or NFT scams using machine learning models based on a data trove collected from vast sources.
Chainsight’s service is trusted by leading organizations both in the private and public sectors. To name a few, the world’s leading crypto exchange platform Binance, Trend Micro, G20, PwC, and the Financial Services Agency of Japan are all institutions that have sought service from the Taiwanese-founded startup.
Use AI to repel web 3 attacks
“A few years ago, at the BlackHat cyber security summit, I noticed that very few big tech companies are recognizing the impacts of web 3 attacks,” noted Ernie Ho, co-founder and CEO of Chainsight. The Black Hat summit is held annually and has grown to be the most respected internet security event for security professionals. If few have acknowledged web 3 issues at this premier event, it means the rest of world has mostly remain dormant.
Ho graduated from Carnegie Mellon University(CMU) with a master’s degree in Computer Science. An expert of AI, Ho has been looking to integrate the power of machine learning across various fields of knowledge. In the past years, he led the AI Robotics team at CMU developing autonomous delivery vehicles.
Working hands-on with multiple AI projects made Ho realize the power that connecting AI with data security could unleash. If harnessed correctly, AI systems can be trained to generate alerts for threats, identify new types of malware and protect sensitive data for organizations.
With that in mind, Ho entered several data security hackathons. Ho is the winner of the 2018 MIT Bitcoin Hackathon and the Global LongHash Blockchain Hackathon in Tokyo the same year. At the Tokyo Hackathon, Ho and his team garnered second prize with their project “Labeling, Identifying & Classifying Public Address Behavior”.
The biggest predicament of web 3 is its fast growing pace but unacknowledged fraud events. In the blockchain sphere, an eye-popping assortment of applications such as DeFi projects, NFTs or play-to-earn games are intriguing for consumers; however, it could also be overwhelming because users are responsible for “DYOR”, which is short for “do your own research”, a phrase that emerged as one of the most important commandments in the crypto world.
As important as DYOR is, “most people don’t bother doing it,” said Ho. For most people, data security is not placed at the top of their agenda until they’ve experienced ransomware attacks or malicious cyber ambush of some sort.
Chainsight helps web 2 and web 3 users fend off malicious hackers. For example, wallet providers integrated with Chainsight API can alert their users before transacting with malicious smart contracts by doing a quick background checks on contract address.
Let machine learning do the research for you and surf web 3 worry-free. “With our services, we facilitate people’s trust in blockchain applications,” said Ho.
Crypto heist: a global issue
As cybersecurity is by nature a world-wide problem, Chainsight has laid out plans for global presence since day one. Chainsight has set up its headquarters in Singapore, a “cryptocurrency haven” where crypto-related regulations are more welcoming than the U.S. and Taiwan.
More startups are aiming to solve the pressing global issue of web 3 attacks. For example, New York-based CipherTrace enhances crypto-related monitoring, which was acquired by Mastercard in 2021.
As competition intensifies in web 3 security, Chainsight has gained a competitive edge over other solution providers due to: Providing support for a diverse range of blockchain applications (NFTs, dApps and DeFi), cross-chain investigation, proprietary AI training data and faster update pipeline.
According to Ho, crypto heists are extremely tricky partly because hackers are constantly doling out new hacking schemes. The new schemes are so creative that even blockchain veterans are susceptible to fraud. On the other hand, blockchain noobs are frequently falling for more traditional malicious attacks such as phishing websites. For web 3 noobs and veterans alike, Chainsight can help ward off the scams.
Crypto transactions often occur across chains, thus making these assets vulnerable to attacks during the switching process. Such crypto security issues are dubbed “cross-chain bridge” attacks. To address cross-chain vulnerability, Chainsight provides cross-chain investigation across 13 different chains, including widely popular Ethereum, Bitcoin and Solana.
Another common scam is phishing sites, in which crypto or NFTs will be looted once users click on a malicious address. For those concerned with this problem, they can provide content, wallet or smart contract addresses to Chainsight, which will then be assessed by its AI system to detect scam and provide insights to customers in real time.
Unforgettable journey as one of the Y Combinator S22 cohort
In the post-pandemic world, an increasing amount of in-person events have resumed. The Chainsight team was in the Bay Area this summer, going from one YC event to another. “It was truly a fruitful experience,” said Ho.
YC is dubbed the “bootcamp for startups”. Apart from giving a USD$500,000 check to selected startups, YC also hosts a series of networking events, office hours and panel talks for the promising startups. It was a golden opportunity to seek advice from top investors, and connect with brilliant minds in the startup scene.
As a rare Taiwanese founder among YC’s startup batch, Ho has some insights to share with those eager to be recognized by global investors like Y Combinator. It all boils down to two key takeaways.
Hold your ground, but don’t forget to be agile
During a YC networking event, Ho saw Paul Graham, the legendary investor and founder of YC, all alone at a booth getting food and drinks. He struck up a conversation with Graham, and the two ended up having a great chat. Ho walked away satisfied with the insights and encouraging words from him.
Striking a conversation with Graham might seem intimidating to some, but Ho said he just went along with his instinct. It turns out that he got a piece of valuable advice from him.
“For startups still in the early-stage, you’ve got to hold your ground, but you musn’t forget about agility,” concluded Ho. In the early stage, there will be times when the team realize it's not going in the right direction. However, it is critical that startups hold on to what they are doing, while resisting the temptation to try out new tricks (or “pivot”, as most founders like to call it) once a project fails.
Make something people want
Making it to Y Combinator is indeed a celebration-worthy milestone, however it is far from the last stop for Chainsight. Start-ups have to be in the consumer's shoes, as it would help them improve their products to cater to people’s needs and eventually solve their problems.
“Make something people want” is a motto of Y Combinator. Easier said than done, startup founders often overlook its importance.
In Chainsight’s case, the team saw that people all around the world are struggling with trust issues regarding web 3. Hence, they stepped in to provide security service for individuals, businesses and governments globally. Addressing this common problem on a global scale is what likely made them stand out among many other aspiring entrepreneurs.
Ho quoted the famous architect Thomas Church, “the only limit to your garden is at the boundaries of your imagination.” Such words uttered by a architecture expert are also applicable for startup founders who want to make the cut.
In a world where cyberspace is increasingly interconnected with our daily lives, it is a relief that these cypherpunks are dreaming big and helping people ward off the newest form of cyberspace attacks.
The article is supported by National Development Council
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