Quadrata, a Web3 passport startup based in California, announced a $7.5 million seed funding round led by the blockchain VC firm Dragonfly Capital. Less than a year old, the young startup launched a data passport for anti-money laundering (AML) for defi in March.
CEO and Co-founder Fabrice Cheng said Dragonfly Capital’s faith means the world to Quadrata, and the team was thrilled to have them as a strategic advisor leading the investment round. Dragonfly helped back Avalanche, Pool Together, Coinmetrics, and other native Web3 and defi projects in the past.
“Partnering with a web3-native fund was a key consideration during our funding round,” Cheng said. “We look forward to partnering with Dragonfly to provide an identity solution that brings maturity to blockchain and decentralized applications.”
Integrate CeFi AML into DeFi
The firm said the funds would allow Quadrata to grow its ecosystem to integrate hundreds of dApps and offer the Quadrata Passport to millions of blockchain users. As Cheng described to the Fintech Nexus team, the Quadrata passport provides access natively on the public blockchain, and Cheng said: CeFi background checks for defi users.
“Blockchain technology is special; it has the power to replace and power the financial services of tomorrow, especially when you look at how those technologies are antiquated today,” Cheng said. “For us, it’s pretty obvious: A world powered by blockchain is a world that will need access to identity, access to some compliance, and access to reputations.”
By taking TransUnion AML and KYC data and running it through Spring Labs’ Ky0x digital passport, Quadrata creates an ERC1155 NFT that records if a customer passed a background check but protects privacy.
To fit in with DeFi use cases, the NFT does not hold any personal data and updates regularly through off-chain background checks. Using the ethereum Mainnet, users can save a passport directly on their Web3 wallet, like MetaMask, or host them on OpenSea.io.
Funding means more blockchains
The team said the completed round would enable Quadrata to become an ID solution across multiple blockchains. In addition, Quadrata noted it partnered with TransUnion to create a native on-chain reputation score that will reward users for good behavior.
Institutional investors like Franklin Templeton, Abra, GSR Ventures, Orange DAO, Fellows Fund, GreatPoint Ventures, and August Capital also joined the round. In a release, Quadrata said Angel investors from the industry participated in the round, including Balaji Srinivasan from Coinbase, Ryan Selkis from Messari, Mathieu Nouzareth from The Sandbox, Zeneca from ZenAcademy, and Wilson Lee.
To allow Web3 projects to provide a safer and more secure experience for its users, Quadrata said its NFT Passport would host verifiable identity information and compliance review ratings. The firm said that the goal is to help play-to-earn games, NFT drops, or token airdrops mitigate the risk of exploitive automated bots.
DeFi looks to check user backgrounds
Haseeb Qureshi, Managing Partner, Dragonfly Capital, said after recent defi catastrophes, many projects in the space are starting to take steps to ensure that their users are real people, and Quadrata helps.
“In the current Web3 ecosystem, identity is the holy grail problem that remains unsolved,” Qureshi said. “As developers continue bringing utility to Web3, Quadrata’s already robust use cases will play an instrumental role in making participating in the technological revolution safer and easier.”
Dragonfly Capital said in a release it is a global crypto fund that partners with crypto founders in all stages of development, from seed to Series C, to liquid tokens.
‘Solving the identity issue is crucial’
Kevin Farrelly, VP/Director of Digital Assets, Franklin Templeton, said that Quadrata is creating a solution to the defi identity issue with an extra layer of verification while conserving the anonymity of the blockchain.
“Solving the identity issue is crucial as the financial services industry increasingly adopts crypto and blockchain technology,” he said. “I look forward to seeing how the data passport network will fill that gap in the market and facilitate institutional adoption.”
In 2023, Quadrata said it plans to develop the passport tech across additional blockchains, decentralize its network, and partner with projects to make on-chain identity available for institutions and users.
The firm describes its tech as privacy-preserving and Sybil-resistant technology, allowing smart contract applications native on-chain access to information like DID, KYC/AML risk scores, and country info, with Web3 credit reputation and accredited investors status to come. Quadrata originally spun out from Spring Labs.
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