In an unsurprising (and somewhat ironic) story, Hosho, a smart contract auditing company for ICOs has been forced to lay off 80% of its staff due to slow business growth that hit a tipping point in late 2018. This is another victim of the crypto bear market in the growing list of crypto lay-offs.
Hosho aimed to provide a layer of transparency to the ICO market by offering auditing services to ICO projects. Unfortunately, they didn’t anticipate the level of fraudulent activities that would be occurring at that time.
Hosho underestimated the degree to which companies in the space were unwilling to be transparent about their internal affairs or were engaging in negligent and fraudulent activities. Hartej Sawhney, the company’s co-founder, stated that “many smart contracts of projects they audited were a complete mismatch from what the projects had advertised, while others were simply just cut and pasted from similar projects.”
In some cases, projects would even offer to bribe Hosho with their tokens if they agree to give them a certificate acknowledging that their smart contracts were functional and could be trusted.
Things only got worse as the market continued to slide further downhill through the rest of 2018, making it harder for Hosho to attract new ICO customers or fill out conferences it had previously hosted to boost its brand.
The company has now shrunk from 37 employees down to seven, but Hartej is still optimistic that Hosho can carve a new way. In addition to providing more automated tools for its smart contracts and protocol audits, Hosho is expanding into white-hat security services, offering exchanges and other crypto firms who are losing millions daily due to hacks a more robust system for defending their business.
Ultimately, it seems like Hosho had the right idea to deliver auditing services to the ICO market, but the timing may have been too early in 2017-2018. Now, that the market seems to be more settled and people place more value on transparency and security, Hosho may have a chance to succeed in its second time around.