Crypto Custodial Service Officially Launches – Anchor Labs Rolls Its Own A16z-Backed Startup This Week
It's been announced this week that a Cryptocurrency based startup company has officially started up its own custodial service for institutional companies. It stated that it can provide a more secure, and stable cold storage system, which offers far easier access to assets.
The announcement of this cold storage system comes from Anchor Labs, which originally made the headlines after successfully raising over $17 million in series A funds, thanks to the support of Andreesen Horowitz, Khosla Ventures, Mark McCombe from Blackrock, the co-founder of AngelList – Naval Ravikant, and others.
Anchor Labs has since announced the creation of its own digital asset custodial system – Anchorage – as of this Wednesday.
With the creation of Anchorage, the company has stated that it has the ability to provide “all the benefits of asset accessibility.” This includes benefits such as capturing yield from the staking of a cryptocurrency, voting, faster transaction times and a more streamlined proof of existing protocol.
Anchorage was a company that was co-founded by Nathan McCauley along with Diogo Mónica, both of which had previously worked together on the encrypted credit card reader for Square, as well as operating as the leaders of the security team for Docker.
“Up until this points, investors were previously constrained by the long-problematic limitations of ‘cold storage' custodial services. Some of the endemic problems that they suffer from include their vulnerability to human error or even pure incompetency, along with holding these same digital assets in an overly inaccessible fashion. This makes them far slower to move and can't be used to capture yield effectively. These factors mean that they can lead to depreciation due to dilution over time.” This comes from their Medium post from this week.
According to Mónica and McCauley through the confines of a blog post they co-authored:
“There are institutional levels of interest within the cryptocurrency space, but that a number of firms seek to store their assets have had to make an unnecessary trade-off “between security and asset productivity.”
This is completely true, there are plenty of companies out there that have had to undergo this tradeoff, leading a number of major cold storage custodians like Kingdom Trust and BitGo, to strike up collaborative agreements with liquidity providers. This means that trades can be executed quickly without coins ever having to leave the vault.
While this is the mechanic that currently exists between storage and liquidity providers, it remains uncertain how exactly it is that Anchorage intends to provide this level of speed and efficiency to its clients as of yet. There are few specifics provided within the co-founders blog post on the solution they proposed.
When the duo were contacted by media outlets, an individual speaking on behalf of Anchor Labs stated that the cold storage system relied on people, “Anchorage is the sole custodial system to have effectively solved digital asset custody through the elimination of human points of failure,” but did not go so far as to elaborate what these “human points of failure” were or how Anchorage managed to resolve them.
The spokesperson also stated that Anchorage clients can “move their assets within mere minutes of having their transaction approved.”
Drawing In The Whales With Anchors
The Anchor Labs founders did that the time to explain the underlying origin of the idea; writing that digital asset funds had come from the requests they had sent out for managing their private keys securely.
“As we grew to understand the problem, we envisioned a solution based on the security principles we understood well: one that combines multi-person integrity with hardware-based systems, allowing us to build a platform that is more secure than cold storage, but has the benefits of keeping the assets accessible.”
While they did go on to comment on this underlying accessibility, there was little in the way of meticulous detail as to their own experiences.
Mónica and McCaulet stated that, “The creation of Anchorage means a more effective system of storage for users, and applies the world's most advanced and thoroughly proven digital security architecture to better support institutional investments, while still enabling a system of active on-chain participation which wasn't previously allowed through the conventional offline cold-storage system.”
The inclusion of more institutions through a new setup for custodial solutions can allow for a greater degree of growth within the blockchain space. A steady influx of funding, along with forming the foundation for a ‘Rich and mature financial ecosystem,' they wrote on their collaborative blog.
“The bull run of 2017 proved that crypto assets have tremendous potential value, and the backslide of 2018 showed us that the financial system surrounding those assets is far from maturity,” their blog went on to state, further addressing the complexities that come from the financial system.
“The global financial system is complex, and depends upon infrastructure whose crypto analogs haven’t yet been built. The digital economy needs that infrastructure to thrive.”