Modular blockchain developer Inco raises $4.5 million, launches first testnet

Inco, a modular blockchain developer focused on confidentiality, has raised $4.5 million in a seed funding round.

Crypto-focused venture firm 1kx led the round, with Circle Ventures, GSR, Polygon Ventures, Robot Ventures, Alliance DAO, zkSync developer Matter Labs and others participating, Inco said Wednesday. The firm began raising for the seed round in September and closed it around November, founder Remi Gai told The Block. The round was structured as a simple agreement for future equity (SAFE) plus token warrants, Gai said — declining to comment on the valuation.

Founded last August, Inco launched its first testnet — called Gentry — today. Its second testnet, Paillier, is scheduled for release between the second and third quarters of this year, with the mainnet set for the fourth quarter.

What is Inco?

Inco is a modular, interoperable Layer 1 blockchain network focused on bringing confidentiality to decentralized applications. It can be compared to modular blockchain projects like Celestia and Lava, which focus on data availability and data access, respectively, while Inco concentrates on confidentiality.

Although technologies such as zero-knowledge proofs and trusted execution environments provide certain privacy features, these methods have limitations, according to Gai. Inco integrates fully homomorphic encryption and keeps on-chain data confidential yet auditable.

"Smart contracts have been limited by their lack of access to programmable confidentiality. This changes with the latest innovations in threshold FHE and blockchain that Inco is bringing to market," Wei Dai, research partner at 1kx, said in a statement.

Inco has a strategic partnership with Zama, an FHE research company. Zama CEO Rand Hindi is an advisor to Inco, along with Polygon co-founder Sandeep Nailwal and venture capitalist Anand Iyer, who is managing general partner at Canonical Crypto and venture partner at Lightspeed Venture Partners.

Inco utilizing Cosmos SDK and EigenLayer

Inco is being built using the Cosmos SDK and will be secured by Ethereum via EigenLayer, Gai said.

"Typically, new Cosmos projects have a lower market cap and are more susceptible to attacks because of it," Gai noted. "So we will implement dual staking (ETH + INCO), which will allow us to benefit from Ethereum's larger economic security and stability to secure our network."

Since Inco's validators will act as EigenLayer actively validated services, it can directly interact with Ethereum, thus becoming Ethereum's native confidentiality layer, Gai said — adding that Inco will also support other public Layer 1 and Layer 2 networks.

The EigenLayer integration will be part of Inco's second testnet, Paillier, while dual staking will be introduced with the mainnet launch, Gai noted.

Once launched, Inco aims to create an ecosystem of confidential decentralized applications. According to Gai, Solidity developers can create such dApps "within 20 minutes" with Inco.

Currently, eight people are working with Inco. With fresh funding in place, Gai plans to hire a few more engineers soon and additional staff across departments at different points, such as the next funding round and after the mainnet launch.