Why we invested in Chainsight, an API for web3 background checks
Fraud and phishing are ever-present threats in web3 because the inherent anonymity of the ecosystem and limited penalties for bad actors results in everyday consumers being scammed.
But now, Chainsight has developed a new Chrome browser extension for consumers. The extension is built on Chainsight’s existing enterprise API, which helps detect threats and protects users from transacting with malicious dApps, wallets, fake tokens, counterfeit NFTs, and phishing sites. This is as an innovative web3 background check solution designed to protect consumers from being duped by bad actors posing as trusted parties.
Samsung Next invested in Chainsight because its API is powered by an aggregated dataset of more than 25 billion transactions and over 250 million data-labels. Much of the data was collected from difficult-to-access sources, such as the dark web and scamming projects that have been shut down. This data has the potential to give Chainsight a competitive moat that can be continuously strengthened through machine learning models that incorporate feedback loops that analyze customer experiences and data about known threats.
Chainsight’s extensive monitoring capabilities has helped its security solution rapidly gain traction, including securing a contract with a leading antivirus company. This is impressive growth for a company that recently graduated from Y Combinator.
The Chainsight platform monitors more than 300,000 dApps and tokens, and over 100 million phishing sites. The API works by enabling real-time background checks to determine if a receiving wallet or website can be trusted. The API flags addresses associated with known scams, dark web activity, and AI-detected suspicious behavior. It then generates a risk score for every recipient address, URL, or web3 domain. Recipient addresses are continuously updated for risk factors associated with fraudulent, suspicious, or illegal behavior.
The market potential for Chainsight will increase as web3 and crypto adoption exposes more consumers to risk. Their exposure is already significant. According to Privacy Affairs, for example, hackers stole $4.3 billion worth of cryptocurrency in 2022 – a 37% increase over the previous year.
Chainsight is filling a unique role in the market. Most web3 solutions focus on protecting businesses or “whales,” not everyday consumers. By contrast, the Chainsight API enables businesses to provide everyday consumers with protection against web3 scams. On the B2C side, Chainsight’s new browser extension, called Web3Check, automatically notifies users if a website they are visiting, or an address they are sending crypto to, is legitimate. Both products complement each other – and make Chainsight a more effective solution for protecting consumers from web3 risks.
Facilitating trust in the web3 ecosystem is important for enterprises and end-users. Chainsight adds a layer of security to web3 transactions that will make consumers more comfortable using cryptocurrency. That bodes well for the company, and for web3 adoption.
Carlos Castellanos is a Samsung Next Investor. Samsung Next's investment strategy is limited to its own views and does not reflect the vision or strategy of any other Samsung business unit, including, but not limited to, Samsung Electronics.