From Network to Vault: The Story of Qredo
As we gear up to launch the fully decentralized Qredo V2 next year, CEO Anthony Foy takes a look in the rearview mirror; tracing the journey so far and extending an invite for the community to join us on our pathway to decentralization.
Back when I first discovered bitcoin in 2011, it was just hitting parity with the dollar and Satoshi Nakamoto was still commenting on the BitcoinTalk forum.
Unfortunately, I couldn't figure out how to buy it!
At the time I was living in Amsterdam, and a friend of mine told me to go down to the red light district to buy over-the-counter in a mysterious bar, but the prospect was almost as unappealing as venturing into the shadowy underworld of the first online crypto brokers.
So, despite seeing the promise of programmable money, the opportunity slipped me by and bitcoin went on the backburner.
Over the next few years, I continued to lead frontier tech companies and got a series of successful exits under my belt.
But I never quite shook the bitcoin bug, and it came back to bite me hard in 2018.
Around the same time, an old business associate of mine — Brian Spector — was watching the rise of bitcoin wide-eyed from the world of enterprise cryptography.
A numbers guy and self-described mathematics nerd, he had worked with RSA Security in the US before leading his own enterprise encryption company. But after selling one too many hardware security modules to banks and intelligence agencies, he started to apply his keen analytical mind to the other kind of crypto — cryptocurrency.
We had met a few years earlier when I made an offer to buy his company, and although the deal fell through, we became friends. So as bitcoin slipped into the mainstream, we began to compare notes on the emerging multichain universe.
The crypto market back then — as remains true today — formed a collection of walled gardens. This made it impossible to move assets directly across chains, and tricky to store and manage them safely, particularly for institutional buyers.
Itching to help overcome this problem, Brian presented me with a seductive solution that harked back to the main value proposition of Bitcoin: trust-minimization.
He argued that the fragmentation of the crypto market came from centralized methods of managing private keys — such as hot wallets, cold storage solutions, and databases — which attempted to shoehorn decentralized assets into centralized boxes.
Without a way of decentralizing private key management, he argued, the potential of cryptoassets would be capped by the limited capacity of the centralized infrastructure needed to manage and protect them.
I was sold.
Shortly afterwards, I made the first angel investment in Qredo. This allowed us to onboard Brian's expert team from his enterprise cryptography firm MIRACL, and get enough hands on deck to start building.
Then, as the crypto bear market set in over the next year, we knuckled down in a tiny WeWork office with a big ambition: bringing decentralized custody to life.
Brian's idea was to extend Satoshi's ethos to private key management, and completely remove trusted third parties from the business of digital asset custody.
But as you might imagine, it was easier said than done.
After months of research, we landed on a concept that relied on multi-party computation (MPC) — a little known cryptographic technique making it possible for distributed computers to generate a digital signature without producing a whole private key at any time.
However, as early MPC custody implementations simply replicated the same old problem of needing to trust a third party, we knew it had to be done differently.
So at a time when everyone from IBM to Kodak was looking to the blockchain for redemption, we dug beneath the hype and came to the conclusion that, in fact, the immutability of the blockchain actually provided the only secure way of implementing MPC.
By melding MPC nodes with a fast-finality blockchain, we laid the foundation for a decentralized custodial Layer 2 MPC network driven by consensus. This, we realized, could eliminate the need for private keys to manage ownership, allowing assets to be stored, transferred instantly, and governed flexibly across chains without the need for an intermediary.
Pretty soon, our family of cryptographers and developers had outgrown the WeWork office, and we moved to a new headquarters in Shoreditch, London.
I then made another more significant angel investment, and joined the company officially as CEO. Soon afterwards in December 2019, we had our first minimum viable product: the Qredo Testnet.
With a working prototype, we were ready to put the next phase of the plan into action: demonstrating to institutional players — such as traders, custodians, and market makers — that we had the tech to unlock this new asset class.
In the beginning, simply explaining what Qredo was doing was a challenge.
Our pitches were met with blank stares and ponderous silences. Prospects reacted with a mixture of bafflement and intrigue, and some even flat out denied it was possible to decentralize private key management.
But after refining the messaging over hours of discussions, our pitches started hitting home.
We scaled up sales and marketing to amplify our voice, and by the time the MainNet launch rolled around in September 2020 we had secured massive support. This translated to funding for Qredo Ltd, and we closed a $2.9 million pre-seed round led by gumi Cryptos in March 2019, followed later by an $11 million seed round in March 2021 that included Celsius, Deribit, Nexo, and Coinbase Ventures as investors.
Meanwhile, our cardboard prototypes were being replaced with the gleaming hardware of real MPC Nodes, and being installed in financial centers around the world. This gave us the functionality to launch Ethereum support and atomic swaps, and get the industry-first capabilities needed to start onboarding institutional players.
One of the first people to really grok Qredo was Imad Warde of portfolio management system HedgeGuard, which became one of our first partners after a chance meeting at the CoinDesk Consensus Conference in 2019.
This set the stage for many partnerships and integrations, including licensed custodian HexTrust, lending protocol X-Margin, and of course Web3 gateway MetaMask Institutional. More recently, we've partnered with the Bitcoin Alliance (including the Open Bank Project, API3, and local bank Banco Hipotecario) to power bitcoinization in El Salvador.
Collectively, the activity catalyzed by these partnerships has helped move the needle on network statistics. As of November 2021, we've almost reached $8bn AuM with ~50,000 wallets and more than 11,000 monthly active network users — reflecting a tight product market fit.
But that's not where the story ends.
Right from the start, the Qredo vision has been not only to open the digital asset market to institutions, but to give everyone access to institutional-grade digital asset infrastructure. Better yet, on an open source platform that is owned and operated by the community.
Launching the Qredo Token in July 2021 was a big milestone in this journey. It galvanized a group of dedicated token holders on the Network, and set us on a path towards decentralization that will eventually see the core team cede ownership and control to the community.
Over the next few months as this process of decentralization gradually unfolds, there will be more opportunities to become part of the Qredo story and join us as a Qredonian, Validator, Liquidity Provider, and more.
Co-founders Anthony Foy and Brian Spector acquired Qredo shell.
Closed $2.9M pre-seed funding round.
First minimum viable product
Patents committed to Apache Milagro incubation project
Launched consensus-driven MPC network v1.0 Testnet
Launched Mainnet v1.0 with BTC support and instant transfers
Added Ethereum support and BTC to ETH atomic swaps
Closed $11M seed round with strategic investors including Celsius, Deribit, Wintermute, and Coinbase Ventures.
Launched support for USDT and USDC corporate accounts with multi-user controls.
Expanded ERC-20 token support
Announced partnership with HedgeGuard
Launched Qredo Token (QRDO) on CoinList
Released Liquidity Hub in open beta