This Web 3 startup has built a developer-friendly stack for secure, privacy-focused apps

In recent times, blockchain has emerged as the core technology powering a wide range of Decentralised Apps (DApps) in cryptocurrency, Decentralised Finance (DeFi), NFTs, etc.

DApps require robust ways for storing data and managing user identity, access and key management in a privacy-focused manner.

Providing a comprehensive stack to help DApp developers address such requirements and build secure, privacy-preserving apps is Arcana Network, a Bengaluru-based blockchain startup founded in 2019 by Mayur Relekar, Aravindh Kumar, and Abhishek Chaudhary.

“To achieve what you could do with Arcana, you’d have to put together three or four different protocols, such as Filecoin or IPFS for decentralised storage, others for key management, authentication, and so on. This would create a Frankenstein’s monster in your codebase. With Arcana, we want apps to come to us and delegate their entire data layer,” says Mayur in a video interaction with BlockchainStory.

Arcana has built a storage and privacy stack for Ethereum DApps and works with devs across crypto, NFTs, DeFi, etc. In fact, it also works with Web 2 (non-decentralised) products in fintech, healthcare, SaaS, etc to bring privacy and security to data.

Need for decentralised storage

In the Web 2 world, data is stored and run by discrete service providers who usually own and operate data centres and servers. Amazon Web Services (AWS) is one of the most popular examples.

Decentralised storage, however, is not run by a singular provider. Instead, multiple people, users, or nodes participate in the network. Assets uploaded to a decentralised network like Arcana’s are encrypted, split up, and distributed among multiple storage nodes.

Aravindh explains, “Such a network can have participants of various sizes, ranging from individuals to smaller data centres with excess capacity. The math and cryptography in the network protocol ensures everyone does what they’re supposed to do and are compensated fairly.”

The founders also list several benefits of decentralised storage over centralised networks. One advantage is its intrinsic anti-monopoly properties, which prevents a leading, central player from controlling supply pricing and features.

“On the consumer side, a decentralised network allows network policy decisions to be taken by participants on the platform, and not by the entity that owns or builds it,” Aravindh adds.

Further, without a singular point of failure, assets on a decentralised storage layer are protected against downtimes, shutdowns, geo-specific disasters, hacking attempts, etc.

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According to Mayur, such decentralised networks can achieve economies of scale beyond those achieved by centralised data networks.

“There are billions of people with a powerful computer in their pocket; almost all of them are connected to the internet, and can provision bandwidth. This capacity can be leveraged into decentralised storage networks that even large enterprises can’t match,” he explains.

“Let’s say I upload a file. The file goes and sits on the 10 nearest smartphones or devices on the network. Uploads are much faster. When I want the asset back, it comes from these 10 nearby devices, making downloads much faster as well.”

The Arcana edge

Besides decentralised storage, privacy and security services related to identity, access management and key management also play a critical role in Arcana’s stack.

This is because Arcana aims to bring developer-friendly tools and services that are built on design principles of privacy, and which allow devs to ensure privacy right from product inception. This eliminates the need for patchwork at a later stage, according to Aravindh.

He adds, “IPFS is a competitor for decentralised storage, but the bigger problem to look at is how data moves between people. With Arcana, you can also do access management on-chain without using any servers. Further, access policies are stored alongside the data itself, so you can use a truly decentralised network without touching anything else.”

For instance, Arcana can allow NFT marketplaces to ensure NFT ownership or access is defined within the digital asset itself, instead of pointing to a link that’s stored on some other network.

“We are far more transparent than anyone else, since we log everything to the public blockchain, and our code is open source. This is not something any central player will match,” Mayur claims.

Developers pay Arcana a fixed fee based on usage, and the amount can be paid in stablecoin or in USD (through cards). The founders believe having both options makes Arcana Web 2 and Web 3 friendly, and makes life easier for developers.

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Arcana’s future plans

Going forward, Arcana aims to become a data layer for apps, almost like a public goods project for data where the network could possibly be run in the form of a Decentralised Autonomous Organisation (DAO).

“We have launched our alpha testnet. Our beta testnet is coming soon, followed by our mainnet launch later this year,” Aravindh says.

Mayur adds that the startup eventually wants to work on data management for querying and processing encrypted data, but it requires a wider and more robust Web 3 ecosystem to make this happen.

To make its plans a reality, Arcana in October 2021 raised $2.3 million from Republic Crypto and Woodstock Fund, as well as participation from Digital Currency Group (DCG), Hyperedge, Sahil Lavingia's shl.vc, Fenbushi Capital, LD Capital, and Paradigm Shift VC.

It also saw participation from Ganesh Swami, CEO of Covalent; Ajeet Khurana, Buidlers Tribe; Nischal Shetty of WazirX; and Ajit Tripathi from Aave, along with Arcana’s seed investors AU21 and Arcanum Capital.

In July 2021, it raised a seed round of $375k from investors Balaji Srinivasan, former CTO of Coinbase; Sandeep Nailwal and JD Kanani, Co-founders of Polygon (formerly Matic); Kendrick Nguyen, Founder and CEO of Republic; and other top angels in the crypto ecosystem.