TL;DR: NextBlock has invested $3 million in Soda Labs, funding the company’s entire seed round. Soda is building privacy infrastructure based on garbled circuits and multiparty computation so financial applications can process confidential data while remaining connected to public blockchains.
Public blockchains are very good at proving what happened.
That is also one of the reasons banks struggle to use them.
Soda Labs has raised $3 million to tackle the problem from the opposite direction: keep the public blockchain, but make sensitive computation private.
Luxembourg-based venture firm NextBlock funded the company’s entire seed round.
Soda has spent roughly two and a half years developing a cryptographic system based on garbled circuits and multiparty computation, often shortened to GC-MPC.
The idea is to let applications perform calculations on private data without exposing the underlying information to everyone watching the chain.
For financial institutions, that could apply to transaction details, balances, business logic or other data that cannot simply be made public.
Privacy is one of the central contradictions in institutional blockchain adoption.
Banks like the idea of shared settlement infrastructure and programmable assets.
They generally do not like the idea of broadcasting client activity, positions and commercial information to the world.
One solution is to build private or permissioned blockchains.
Soda is betting that institutions would rather keep access to public networks and add confidentiality at the computation layer.
Its technology uses established cryptographic components including AES and SHA-256 and is designed to run on ordinary cloud CPUs rather than requiring specialized hardware.
That could matter for adoption.
Privacy systems are much harder to deploy if every user needs unusual infrastructure or if computation becomes prohibitively expensive.
Soda says its architecture is designed for financial applications that need to remain interoperable with existing public blockchain ecosystems.
The $3 million round is small by the standards of the biggest crypto infrastructure raises, but the problem Soda is working on has become more valuable as tokenization expands.
A tokenized bond or fund can exist on a public chain while still carrying confidential information around counterparties, trading and ownership.
Institutions need ways to prove rules were followed without publishing every piece of data involved.
That is why privacy technology is reappearing in a different form from the anonymous-transaction narrative that dominated earlier crypto cycles.
The demand is increasingly about selective confidentiality.
Regulators, auditors or authorized parties may need access to information while the wider public does not.
Soda’s challenge is proving that its cryptographic approach can deliver that privacy without making applications too slow or complex to use.
NextBlock is betting $3 million that it can.
If public blockchains are going to host more conventional finance, the networks may need to learn an unusual skill.
They need to remain verifiable without making everything visible.
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