How to protect code from AI

Earlier today, developers of Zcash, a blockchain based privacy protocol, disclosed a flaw in the protocol's shielded pool that had gone undetected for years. It could have minted counterfeit ZEC (Zcash's native currency) that, because the pool is private, would remain undiscovered. A researcher hired by Zcash developers specifically to hunt for such vulnerabilities found it last week using Anthropic's new Claude Opus 4.8.

It shows once more that security risks are on the rise, and blockchain protocols are not immune to this threat. Bugs that survived years of human review are being found by one person with a capable model. Anthropic's restricted Mythos model, released in April to about fifty critical infrastructure operators, has already surfaced more than 10,000 high and critical severity flaws in some of the most used software in the world.

Yet the same technology posing the threat is also part of the solution. The holy grail for bug free software is formal verification, a mathematical proof that code does what its specification says. Ethereum founder Vitalik Buterin, no math novice himself, wrote a blogpost about formal verification in May, and made the point that a provably bug free Ethereum "is a goal that all cybersecurity researchers would have thought is absurd and impossible, up until roughly 6 months ago. Now, it's on the cusp of being possible, thanks to AI assisted formal verification."

Our portfolio company Math, Inc. is one of only a handful of companies able to deliver such proofs, through AI tools trained by their uniquely capable mathematicians. Math, Inc.'s Gauss agent recently completed a formal proof that had stalled human experts for eighteen months.

With the full release of Mythos now imminent and the other frontier labs approaching similar capabilities, we are once again entering new territory. The one thing to be certain of is that ignoring the problem will produce some unhappy losers, while the winners from this technology, companies like Math, Inc., find themselves in a uniquely strong position.

Also this week

• JPMorgan, Citi-backed consortium plans to launch tokenized deposit network in early 2027
• Goldman Sachs teams with Apex, Archax for tokenized real estate fund
• Mastercard expands stablecoin settlement options with USDC, PYUSD and RLUSD across eight blockchains, adding weekend and holiday cycles
• Payment giants Stripe, Visa, Mastercard said to be among backers of soon-to-debut stablecoin platform
• Deel deploys Stripe's full stablecoin stack to pay 1.5 million contractors in DLUSD
• Revolut's US bank to offer stablecoin services alongside FDIC-insured products

Relevant financial updates

• Coinone has received a $106mln strategic investment with investments from OKX Ventures, Korea Investment Partners
• fomo, a mobile application for trading cryptocurrencies, has raised $67mln in an undisclosed funding round
• SignalPlus, a centralized exchange, has raised $50mln in an Extended Series B round led by Hashkey Capital with investments from AppWorks Ventures, BlockBooster at a $500mln valuation
• WasabiCard, a decentralized payments platform, has raised $10mln in a Pre Series A round with investments from Avenir Group, Vision Plus Capital, 01VC, Vernal Capital
• Helium Mobile*, a mobile virtual network operator built on top of the Helium Network, has been acquired by Noble Mobile for an undisclosed amount
• Embed, a European embedded payments company, was acquired by OpenFX* for an undisclosed amount
• Variant, a crypto venture firm, raised $222 million for their new fund
• FalconX*, a crypto prime broker, confidentially filed an S-1 draft last week

*Underlying TBV portfolio position | Prices as per 05/06

Interesting things to read

• Eigenlayer CEO Sreeram Kannan's piece on how two university students used AI agents to partially reverse engineer Google's recent quantum circuit research
• Vitalik Buterin's blog post (for the die-hards as it is very technical): A shallow dive into formal verification

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