ZenGo
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ZenGo raises $20 million for its secure crypto wallet app
ZenGo, a mobile app to manage your cryptocurrencies, has raised a $20 million Series A funding round led by Insight Partners. ZenGo is a non-custodial wallet, which means that the company doesn’t manage your crypto assets for you — you remain in control.
Other investors include Distributed Global and Austin Rief Ventures. Existing investors Benson Oak, Samsung Next, Elron, Collider Ventures, FJ Labs and others also participated in today’s funding round.
What makes ZenGo different from other wallet apps is that the company is trying to build something that is more secure than your average crypto wallet while remaining simple to use and understand. It competes with other non-custodial wallets, such as Coinbase Wallet (not Coinbase.com), Argent, etc.
In particular, ZenGo is based on multiparty computation (MPC). When you first create your wallet, ZenGo generates multiple secrets that are stored and encrypted in different ways. It means that the company can’t access your tokens directly and you can recover your wallet if you lose your phone.
Other crypto companies focused on infrastructure and enterprise clients have also opted for MPC as their security model. Fireblocks, a company that has recently raised $133 million, is one example.
But ZenGo is building a consumer app. In 2020, the company has processed more than $100 million in crypto transactions from 100,000 users. ZenGo has reached the same milestone in the first three months of 2021 and added another 100,000 users.
You can browse DeFi projects through ZenGo and access savings pools. The startup takes a cut on these investments.
With today’s funding round, ZenGo plans to expand with the same philosophy in mind. You can expect support for more chains and assets, more partnerships and options to buy cryptocurrencies and convert them to fiat money, etc.
The company recently announced plans to launch a debit card. This way, users will be able to convert their crypto assets and then spend them wherever Visa cards are accepted. In other words, ZenGo is building a crypto super app with a focus on security.
Image Credits: ZenGo
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Crypto wallet app ZenGo launches savings mode
ZenGo is expanding beyond the basic features of a cryptocurrency wallet — letting you hold, send and receive crypto assets. You can now set aside some of your crypto assets to earn interests. In other words, ZenGo now also acts like a savings account.
The company has partnered with two DeFi projects for the new feature. DeFi means “decentralized finance”, and it has been a hot trend in the cryptocurrency space. DeFi projects are the blockchain equivalent of traditional financial products. For instance, you can lend and borrow money, invest in derivative assets and more.
If you want to learn more about DeFi, here’s an article I wrote on the subject:
But let’s come back to ZenGo. When you have crypto assets in your ZenGo wallet, you can now open the savings tab, pick an asset, such as Dai, and select what percentage of your holdings you want to set aside.
After that, all you have to do is wait. You get an overview of your savings “accounts” at any time. This way, you can see your total earned interests. Interests are automatically reinvested over time. You can move your money from those DeFi projects back to your wallet whenever you want.
Behind the scene, ZenGo uses the Compound protocol, a lending DeFi project. It works a bit like LendingClub, but on the blockchain. Some users send money to Compound to contribute to liquidity pools. Other users borrow money from that pool.
Interest rates go up and down depending on supply and demand. That’s why you currently earn more interests when you inject DAI or USD Coin in Compound. But that could change over time.
ZenGo also uses Figment in order to stake Tezos. This time, it isn’t a lending marketplace. When you lock some money in a staking project, it means that you support the operations of a particular blockchain. Few blockchains support staking as they need to be based on proof-of-stake.
For the end user, it looks like a savings account whether you’re relying on Compound or Figment. There are other wallet apps that let you access DeFi projects, such as Coinbase Wallet and Argent. But ZenGo thinks they’re still too complicated for regular users.
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ZenGo wants to become the crypto wallet for the masses
KZen is about to release ZenGo, a mobile app to manage your cryptocurrencies securely and more easily. There are already countless crypto wallets out there, but the startup thinks they’re all either too complicated or too insecure.
If you own cryptocurrencies, chances are they’re sitting on an exchange, such as Coinbase or Binance. If somebody manages to log in to your account, nothing is stopping them from sending those assets to other wallets and stealing everything.
Worse, if somebody hacks an exchange, they could potentially divert cryptocurrencies from that exchange’s wallets. In other words, leaving your cryptocurrencies on an exchange means you give your assets to that exchange and hope they properly take care of them.
On the other end of the spectrum, you can manage your private keys yourself and rely on a hardware wallet from Ledger and Trezor. The learning curve is too hard for many people. And if you don’t follow instructions properly, you might end up losing access to your wallet or accidentally sharing private keys.
Enough about other wallets, let’s talk about ZenGo. Former TechCrunch editor Ouriel Ohayon and his team think the perfect wallet app involves a smartphone you own paired with ZenGo’s servers.
The company uses threshold signatures, which means that you need both ZenGo’s servers and your smartphone to initiate a transaction. If you lose your device, you can recover your funds. But the startup can’t access your cryptocurrencies on its own.
Behind the scene, ZenGo still uses a public key and private secrets, but everything is completely transparent for the end user.
When you set up your wallet, two private secrets are generated separately and stored in multiple ways — one part is on your smartphone, the other is on the servers. You need both parts to sign a transaction. If you back up your device part to ZenGo’s servers, you can recover all parts in case you lose your device, for instance.
ZenGo can’t directly access the second part on its own because it is encrypted using a decryption code that is stored on your iCloud account. But accessing your iCloud is not enough — if you want to recover your wallet, you need to prove your identity.
That’s why the company stores a 3D biometric face map to let you restore your wallet on a new device. The company partners with ZoOm so that you can create a face map from any smartphone with a selfie camera.
The security model has been open-sourced and I hope many security experts will try to find vulnerabilities. That’s the only way you can know for sure that it’s a secure system.
All of this sounds complicated, but most users won’t even realize what’s happening. I tried the app and it’s a well-designed mobile app. Right now, it only supports Bitcoin and Ethereum, but more assets are on the way. The company tracks your public addresses to notify you when you receive funds.
The app isn’t available just yet. It should launch as a beta this week and arrive in the stores pretty soon.
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