Opacity Labs, the developer behind Opacity Network, a data verification platform utilizing zero-knowledge proofs, has raised $12 million in a seed funding round.

Archetype and Breyer Capital co-led the round, with participation from a16z Crypto Startup Accelerator (CSX), Finality Capital Partners, Bodhi Ventures and Escape Velocity (EV3), Opacity Labs said Tuesday.

The startup began its fundraising efforts in July and closed the round last month, co-founder Hersh Patel told The Block. The funding round was structured as a simple agreement for future equity (SAFE) with a valuation cap and a token warrant, Patel said, declining to disclose the specific valuation.

The seed round brings Opacity's total funding to $13.4 million, following a previous $1.4 million pre-seed round.

Opacity is a data verification network that utilizes zero-knowledge proofs, allowing users to prove information without disclosing the underlying details. For example, individuals can verify their income for a mortgage application without revealing the actual amount.

Technically speaking, Opacity utilizes zkTLS (zero-knowledge transport layer security), an extension of the standard TLS protocol that incorporates zero-knowledge proofs to enhance privacy and security during data transmission. Additionally, it employs a multi-party computation (MPC) architecture along with EigenLayer's actively validated services (AVSs), which act as verifiers of user data.

Several crypto projects, especially in the decentralized physical infrastructure network (DePIN) sector, such as Nosh and Teleport, use Opacity Network to verify driver information, Patel said. He added that more partnerships are in the works, including with Heale, which is developing a unified API for logistics, and Earnifi, which is verifying payroll data to improve lending terms for Earned Wage Access customers.

Opacity Network allows developers to bring "verifiable data from any web2 source onchain and, by doing so, removes the barriers to entry for bootstrapping new platforms and onboarding new users," Dmitriy Berenzon, partner at Archetype, said in a statement.

While its platform appears promising, Opacity faces challenges, including "adversarial relationships with large platforms that do not want users to be able to verify their own data," Aaron Marz, Opacity's other co-founder, acknowledged. However, Marz believes the benefits of accessing verified user data will appeal to all companies in the future, not just those in the crypto space.

"Because the value of data locked behind walled gardens is so significant, we expect a Cambrian explosion of new use cases to be unlocked from our partners," Marz told The Block.

There are currently 15 people working for Opacity, and the co-founders plan to remain lean in the near future to scale effectively.

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