The startup helps developers of decentralized applications to store, transfer, and manage personal data of users on the public blockchain.
American blockchain startup NuCypher has completed the distribution of its native NU token among more than 2,000 potential node operators, who have provided more than $125M in ethereum (ETH) for the protocol in September. It is planned that the main network of the project will start working on October 15.
NuCypher was developed in the Y Combinator Business Incubator. The startup entered the market in 2015 and is committed to helping developers of decentralized applications (dApp) to store, transfer, and manage users’ personal data on the public blockchain.
Last October, the startup raised $ 10.67 million through the sale of SAFT contracts. The lead investor then was the hedge fund Polychain Capital, and among the investors were the aforementioned Y Combinator and the mining company Bitmain.
NuCypher’s infrastructure is based on two technologies: Umbral PRE and NuFHE. The first is a proxy re-encryption method that keeps data encrypted and protected from third parties, but simultaneously available for transmission by an approved sender under certain conditions. The second is a kind of full homomorphic encryption, which allows encrypted data to be processed without the necessity to decrypt it.
NuCypher’s workflow. Source: NuCypher
The network node operators are rewarded for their activity as they maintain the blockchain. To influence the operation of the protocol, nodes should participate in the staking of NU tokens. The startup needed to distribute tokens to organizations that it could reasonably count on to participate once the mainnet was launched. It is for this purpose that the WorkLock mechanism was launched.
WorkLock is a special smart contract designed to distribute nodes after the main network starts up. The essence of the mechanism is that users deposit ETH to the address of the smart contract, which is blocked for half a year from the moment the miner is launched. In return, they receive NU tokens that they can use to manage the network nodes.
After six months, program participants can choose to return the deposited tokens back, or further participate in the NU staking. However, if they decide to exit early or act maliciously, they will have to forfeit their ETH.