Web3 is seen as the future of the internet because it allows people to control their own data and digital assets, but crypto developers have been learning from the past when it comes to onboarding new users.
The current state of crypto onboarding is unwieldy and unnecessarily prolonged due to the seed phrase, a series of words created by the crypto wallet to regain access. On a technical level, seed phrases have contributed to the loss of nearly 20% of all bitcoins in circulation, roughly equivalent to the GDP of Hungary, according to Singapore-based crypto infra startup Web3Auth, formerly known as Torus. The lengthy passwords that users are asked to store in a safe place can be a significant barrier to entry for non-technical users who are used to simple “forgot password?” workflows on nearly every traditional internet platform. There have also been security issues when it comes to platforms holding control of a user’s private keys.
Web3Auth, a non-custodial key infrastructure solution for web3 apps and wallets, wants to solve these problems by leveraging social accounts and devices that mainstream users already own to enable users to manage their keys intuitively.
“Users use keys as accounts to trade, hold assets or just interact with blockchains, so control and security of those keys are important,” chief executive officer and co-founder Zhen Yu Young told TechCrunch. “Non-custodial wallets help you manage your key, spanning from solutions as simple as writing a phrase on a paper to more secure methods.”
Web3Auth is powered by the Torus Network, an open source, non-custodial, distributed key management network. Web3Auth builds on this infrastructure to make web3 authentication — including password-less auth, SMS auth or other OAuth methods like Google, Twitter, Discord and Reddit -- in apps and wallets simple and intuitive to use.
Web3Auth announced today it has closed a $13 million Series A led by Sequoia Capital India. This round included participation from Union Square Ventures, Multicoin Capital, FTX, Bitcoin.com, DARMA Capital, Terabyte, Hash, KOSMOS Capital, Kyros Ventures, LD Capital, Minted Labs, P2P Capital, Phoenix VC, Staking Facilities, YBB Capital, Moonwhale Ventures and Decentralab.
The fresh capital brings its total raised to $15 million since its inception in 2019. It will accelerate expansion into decentralized gaming, NFTs and social applications and advance its mission to eliminate seed phrases and make blockchain authentication decentralized and accessible to all with the Series A funding. The company also plans to increase its headcount, Young told TechCrunch.
Image Credits: Web3Auth
Web3Auth’s authentication infrastructure is designed to make it easy for developers to build familiar login flows such as single sign-on with Google and Twitter, eliminating the need for users to directly interface with vulnerable public-private key pairs. It is also designed to give more advanced users the ability to connect the wallet or key management system.
“We designed Web3Auth to bypass the UX obstacles holding back mainstream crypto adoption. True to our focus on accessibility, we wanted Web3Auth to meet users wherever they are. Intuitive and familiar login flows are needed if we want to onboard the next wave of mainstream users into crypto,” said Young. “We’re encouraged that some of the best investors in the world care deeply about usability and accessibility in crypto. We’re extremely grateful for their support, and we’re going to use it to catapult web3 into the future.”
In 2021, more than 300 applications and wallets selected Web3Auth to secure over four million users’ private keys. Its users have increased 30 times since the same time last year, Young noted.
“Our main users are web3 wallets and applications. Many popular wallets in the ecosystems, such as Binance Extension, Kepler, Kukai, Skyweaver and Kash, are powered by Web3Auth” in their core flows to boost conversion rates, reduce loss and support tickets, Young told TechCrunch. “On the application side, the NFT and gaming applications utilizing Web3Auth that are particularly popular include Skyweaver, Rarible MyCryptoHeros, and others.”
Young pointed out similar platforms like Magic Link, which provides key management through a different infrastructure like AWS Cloud HSM to store user keys, and Fireblock’s underlying infrastructure that utilizes multi-party computation (MPC)/threshold cryptography. They are, however, more enterprise and internal-facing authentication relative to the Torus platform being more external, Young said, adding that a similar analogy could be Okta and Auth0 in the Web 2.0 authentication space.
“We think that the non-custodial nature of web3, which allows users to control their own data and destiny, is a huge step forward in bringing power back to the users. This makes the data more portable and safer while continuing to enable existing login product features, giving users the best both worlds. Sequoia Capital India is excited to partner with a team and a product that is concentrating on making crypto more accessible not by adding more bells and whistles but by addressing a long-standing problem at its most fundamental level,” said Anandamoy Roychowdhary, principal of Sequoia India.