Hats secured $ 3.5 million in seed funding to create an âincentiveâ cybersecurity network. Hats is now online with Liquidity and Keros Bounty safes, according to an update shared with CI.
Hats is described as a âdecentralizedâ cybersecurity incentive network âgoverned by its community stakeholders of hackers, projects and token holdersâ.
Hats’ upcoming Protocol Protection Mining (PPM) is a bug bounty vault that “encourages community participation in securing protocols and leveraging HAT tokens in the process, the Hats protocol governance token.”
Hats’ first vault is said to include 100,000 USDC stablecoin, which will be available to anyone who properly discloses vulnerabilities or potential exploits in the Hats protocol.
As mentioned in the announcement, Hats’ round table was led by Greenfield One with contributions from Lemniscap, Spartan capital, Partner in crime, Collider companies, IOSG companies and several other investors. Collider laboratories had offered initial capital and development support.
As stated in the release, the governance of Hats “creates a project token vault, which can fill up to a certain percentage of the token’s circulating supply, by cultivating Hats tokens in the process.” This prompts hackers to “disclose the vulnerability in exchange for the price locked in the vault,” the ad said.
As stated in the press release:
âIn the event of a detected exploit, a hacker will disclose the vulnerability to the specific vault committee, with proof of a chain hash of the disclosure. Each cellar has its own committee [which] is made up of the project’s trusted technical team and, in the future, security researchers and hackers.
This committee will approve or deny the vulnerability and “a subsequent release of funds to the hacker, depending on the token allocation specified in the vault.”
As noted in the update, Hats creates scalable security vaults “using the project’s own token.” The more successful the project and its token, “the higher the premium becomes”. Additionally, prolific NFT artists have “promised support and will create many unique NFTs that will be created especially for hackers or listeners who disclose vulnerabilities reactively.”
As mentioned in the press release:
âBy using a one-time on-chain time stamp commitment and off-chain encrypted communication, hackers can responsibly disclose vulnerabilities to the vault committee, ensuring both the evidence of the hackers’ report of exploitation and the integrity of hacker disclosure. “
âI was thinking about this kind of DeFi project that secures the ecosystem myself, and it’s so good to see a serious group of entrepreneurs running it,â said Robert lauko, the founder of Liquity.
One of the main reasons the team developed Hats was to attract black hat hackers to use their skills to secure cryptocurrency-related projects. By fostering an “open hacking” market that evolves with the initiative’s market capitalization growth and rewards hackers – the project developers will “turn black and gray hackers into white hat hackers”
While explaining how it will all work, the Hats team noted that let’s say an individual, called Mr. Hatter, identifies an exploit or vulnerability in an Ethereum Decentralized Finance (DeFi) protocol.
Right now, the only way for Hatter to get a significant monetary reward for his efforts is to “exploit the protocol, take huge risks, and potentially earn a large amount of limited fungibility funds, say 20 million.” of dollars “.
If he was successful, he would then become “a criminal and could face massive fines and jail time.” In addition, it “will incur a devastating result for the symbolic value of the project, investors, the community and millions of lost collateral for liquidity providers and other parties involved,” the Hats team added.
Hats offers a different path for Mr. Hatter: âDisclose the exploit, get fully fungible funds and the potential to rise from the protocol itself because it is now more secure. In addition, Mr. Hatter “will gain notoriety within the community for vulnerability detection and disclosure, a unique NFT performed by some of the top artists in the NFT space and job offerings based on his reputation”.
Jascha from Greenfiled One, said:
âThe main contributors to Hats are crypto veterans, the funds from this funding round will fuel the next stage of Hat’s growth. With a collective net experience of decades, the team includes Ethereum coding pioneers, R&D experts, and contributors from a range of leading crypto projects. The development team includes -, formerly a member of the Prysmatic Labs team, which implements a popular ETH 2.0 client, and a former R&D manager at DAOstack and a smart contract security auditor.
Roderik de Lemniscap noted:
âDesign flaws and code vulnerabilities are inherent in rapid innovation cycles in the DeFi space. As active participants in the evolution of this new financial infrastructure, we strive to support a variety of layers adding to the overall security of the ecosystem. Hats is developing a unique approach to community-managed bug bounties, allowing for low-profile, incentive-based participation from some of the foremost security practitioners in the space. A well-designed incentive mechanism is poised to increase codebase exposure to more experts while simultaneously reducing audit cycles with each codebase update.