What Is Sherlock?
Sherlock is a unique audit marketplace and smart contract coverage protocol that operates on the Ethereum blockchain. It aims to protect Decentralized Finance (DeFi) users from smart contract exploits through comprehensive security reviews from top auditors and coverage of audited contracts. Sherlock’s governance token, SHER, is used for governance and incentivization purposes within the ecosystem.
Background
Jack Sanford and Evert Kors launched Sherlock in 2022.
How It Works
Sherlock’s innovative model involves partnering with protocols for conducting public audit contests financed by the protocols themselves. Once audited and any issues with their code rectified, the protocols can partner with Sherlock to obtain coverage at an annual rate of 2% (on TVL). This system offers capital efficiency for depositors, as their deposits are used to yield returns on platforms like Aave and Maple Finance.
The Sherlock ecosystem involves three main participants: Protocols, Stakers, and Watsons. Protocols approach Sherlock for audits and optional smart contract coverage. Stakers deposit USDC into pools in return for attractive APYs sourced from protocol premiums and SHER incentive rewards. Watsons, or security experts, conduct full audits of each prospective protocol’s contracts and provide input on the contracts’ risk levels. Sherlock’s auditing process involves dedicated top-tier auditors and a contest pot where anyone can find bugs.
Key Takeaways
- Sherlock is an audit marketplace and smart contract coverage protocol that operates on the Ethereum blockchain, aiming to protect DeFi users from smart contract exploits.
- The Sherlock ecosystem includes protocols, stakers, and Watsons, each playing a crucial role in the audit process and the maintenance of the protocol.
- Sherlock’s innovative model involves conducting public audit contests financed by the protocols themselves, which obtain coverage at an annual rate of 2% (on TVL).
- Stakers deposit USDC into pools and earn attractive APYs from protocol premiums and SHER incentive rewards.
- Sherlock’s auditing process is comprehensive, involving top-tier auditors and a contest pot where anyone can find bugs.
