Phylax Systems aims to reshape blockchain security with ‘credible layer’ solution

Phylax Systems, a new blockchain security company, is working to redefine what security looks like in the blockchain space.

The startup is building a “credible layer” for blockchain security, a multifaceted solution where decentralized apps can register rules about their desired state and a proof system that verifies whether these rules have been violated—thereby making it clear when there has been an exploit, founder Odysseas Lamtzidis said in an interview with The Block on Wednesday.

In other words, it’s freeing up developers to define and enforce security rules on their terms.

"We're not just building a security solution; we're creating a new paradigm for blockchain security," Lamtzidis said. "By providing a decentralized, economically incentivized system, we're making it possible for blockchain technologies to be seen as viable alternatives or even superior in security to traditional systems."

The so-called credible layer integrates with the Ethereum base layer without requiring a hard fork. It includes an “assertion definition market,” where applications state the rules to be followed, and a proof system that verifies whether these rules have been violated or could be vulnerable to exploitation, according to a blog post on Wednesday.

There are two sides to the system: “proof of possibility,” which essentially finds vulnerabilities before they're exploited by demonstrating a type of transaction that could violate preprogrammed rules, and “proof of realization,” which automatically shows when a hack has happened. Developers can also define actions to take if “a vulnerability is proven,” like pausing operations.

The idea is to make it “economically unviable for malicious actors to compromise the network,” Lamtzidis said.

Lamtzidis said Phylax is based on a “fractal design” or a “modular approach,” which enables it to be integrated into various parts of the network stack, including block builders and sequencers in roll-ups or at the app layer. Actors, such as validators or sequencers, earn fees for enforcing rules correctly but face penalties (e.g., slashing) if they fail to do so.

A long-time developer in the Ethereum space, Lamtzidis said the $190 million Nomad hack inspired Phylax in August 2022, when he was helping build that project. Security firm PeckShield said at the time that Nomad developers introduced the vulnerability during a smart contract update that introduced a bug. Rekt estimates there's been more than $80 billion in preventable crypto losses since 2011.

"Security needs to be preventative, not reactive. Methods that can be circumvented will be circumvented."

Phylax will be the first in a series of planned tools built by Lamtzidis’ eight-person team. He said he’s hiring and preparing for a demo deployment in Q4.

"We're not just building a product; we're building a community," said the founder. "We invite everyone to join our community and discuss ‘credible security.’ We believe that our approach can revolutionize blockchain security and pave the way for mainstream adoption."

“The only way for crypto to go mainstream is if users gain more confidence in blockchain interactions,” he said.

Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures .

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Phylax Systems aims to reshape blockchain security with ‘credible layer’ solution

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