Soda Labs Raises $3 Million From NextBlock For Private Blockchain Computation

Seed Round Funded by NextBlock

Soda Labs has raised $3 million in a seed round to develop privacy infrastructure for public blockchains. The Luxembourg-based venture firm NextBlock funded the entire round, supporting two and a half years of development work by the startup.

The company is building a system based on garbled circuits and multiparty computation, a cryptographic approach often shortened to GC-MPC. This technology allows applications to perform calculations on private data without exposing the underlying information to the public chain. The system relies on established cryptographic components, including AES and SHA-256, and is designed to run on ordinary cloud CPUs rather than requiring specialized hardware.

Addressing Institutional Privacy Needs

Soda Labs aims to keep public blockchains intact while making sensitive computation private. The technology is specifically designed for financial applications that need to remain interoperable with existing public blockchain ecosystems. The startup addresses a specific friction point for banks and financial institutions, which often struggle to use public blockchains because they do not want to broadcast client activity, trading positions, or commercial information to the open network.

While one alternative solution to these privacy issues is building private or permissioned blockchains, Soda Labs bets that institutions would prefer to keep access to public networks and add confidentiality at the computation layer. This approach allows companies to prove that rules were followed without publishing every piece of data involved in the transaction or calculation.

Role of Tokenization in Privacy Demand

The problem of privacy has become more valuable as tokenization expands. Tokenized bonds or funds can exist on a public chain while carrying confidential information about counterparties, trading activities, and ownership structures. Institutions need ways to maintain the benefits of public ledger transparency, such as auditability and interoperability, without exposing sensitive commercial data.

Privacy technology is reappearing in a form focused on selective confidentiality rather than anonymous transactions. In this model, regulators, auditors, or authorized parties may need access to specific information for compliance or oversight, while the wider public does not. This distinction is critical for financial use cases where regulatory requirements mandate certain disclosures to authorized bodies without necessitating public visibility.

Market Context and Hardware Requirements

The $3 million round is described as small by the standards of the biggest crypto infrastructure raises. However, it supports the continued development of a system that does not require specialized hardware, a feature that lowers the barrier to entry for cloud-based deployment. By leveraging standard cloud CPUs, the technology aims to be easily integrated into existing institutional infrastructure.

Soda Labs does not provide quotes or specific timelines for product launch in the announcement details provided. The focus remains on the technical development of the GC-MPC system to meet the specific needs of financial institutions operating on public blockchains. The company’s approach contrasts with solutions that seek to anonymize transactions entirely, instead focusing on selective confidentiality for sensitive computations.