Sherlock Wallet: dApp Transaction Debugging & Simulation Development Wallet

Hello friends! Today, I want to talk to you about a very interesting blockchain project called **Sherlock Wallet**, abbreviated as **SHER**. Don’t worry, I won’t use any confusing technical jargon—I’ll try to explain everything in plain language and with easy-to-understand analogies.

What is Sherlock Wallet

Imagine we live in a digital world where many important transactions and agreements are written into a special kind of “smart contract”—these contracts are like self-executing legal documents. In the blockchain world, these smart contracts handle large amounts of digital assets, such as your cryptocurrencies. But if these contracts have vulnerabilities, it’s like the vault door at a bank being left unlocked—trouble! Hackers could sneak in and steal everyone’s money.

Sherlock Wallet (what we’re actually talking about here is the **Sherlock Protocol**, with the token abbreviation SHER) isn’t a regular wallet app for storing your money. Instead, it’s a platform dedicated to providing “security assurance” and “insurance” for these smart contracts. You can think of it as a combination of a “security company” and an “insurance company” in the blockchain world.

Its main functions are:

• Detective agency for finding vulnerabilities: Like Sherlock Holmes, it organizes top “detectives” (security auditors, called “Watsons” in the Sherlock Protocol) to carefully inspect smart contract code and uncover potential security flaws.
• Insurance company providing coverage: If a smart contract audited by Sherlock is unfortunately hacked and users lose assets, the Sherlock Protocol will provide compensation, just like an insurance company.

So, its target users are mainly those project teams deploying smart contracts on the blockchain (called “protocols”), participants who want to provide funds to support this security assurance and earn returns (“stakers”), and of course, professional security auditors (“Watsons”).

Project Vision and Value Proposition

The vision of the Sherlock Protocol is very ambitious—it hopes to make the blockchain world safer, so everyone can use decentralized finance (DeFi) applications without so much anxiety.

The core problems it aims to solve are:

• High audit costs and inconsistent quality: Traditional smart contract audits can be expensive, and the quality varies. Sometimes only a few people audit, which means some issues may be missed.
• Lack of post-incident protection: Even after an audit, if a hack occurs, users often don’t get compensated.
• Complex user experience: For ordinary users, understanding smart contract security is very difficult.

Sherlock Protocol’s value proposition lies in its unique “hybrid audit” model and “financial coverage” mechanism.

• Hybrid audit: It combines the depth of traditional audits with the breadth of crowdsourced audits. It assigns an experienced “senior Watson” (like the lead detective) for in-depth auditing, while also hosting “audit competitions” that attract hundreds of independent security researchers worldwide to hunt for vulnerabilities, greatly increasing the chances of finding issues.
• Financial coverage: This is its biggest highlight. Sherlock Protocol provides “coverage” for audited contracts—if a contract has a critical vulnerability and causes losses, Sherlock will pay out compensation. This means Sherlock itself puts “real money” on the line, aligning its interests with those of the protocol, ensuring audit quality.

Through this approach, Sherlock Protocol not only helps project teams eliminate risks as much as possible before launch, but also provides a safety net after launch, giving users more confidence in DeFi applications.

Technical Features

Sherlock Protocol is built on the Ethereum blockchain.

Its core technical features can be understood as follows:

• Smart contract-driven: The entire protocol operates through a series of smart contracts, managing fund deposits, reward distribution, claims processing, and more.
• Multi-party collaboration mechanism: It has a sophisticated system to coordinate “protocols,” “Watsons” (auditors), and “stakers.” Watsons conduct audits, stakers provide funds as a potential payout pool, and protocols pay fees to receive security assurance.
• Claims arbitration system: If a security incident occurs and compensation is needed, Sherlock has a “Claims Committee” for initial assessment. If the protocol disagrees with the result, the claim can be submitted to a more decentralized third-party arbitration system (such as UMA Optimistic Oracle), ensuring fairness in rulings.
• Sherlock AI: The project also mentions Sherlock AI, which can provide auditor-level analysis to help teams detect vulnerabilities early.

Its technical architecture is like a complex insurance company system, but all rules and processes are written transparently on the blockchain and executed automatically by code, reducing human intervention and opacity.

Tokenomics

The token of Sherlock Protocol is **SHER**.

• Token symbol: SHER
• Issuing chain: Ethereum (ERC-20 token)
• Total supply: According to some sources, the total supply is 1,000,000,000,000 SHER (one trillion). However, some sources list it as “unknown,” which may mean the supply is dynamic or not fully determined yet.
• Token utility: SHER plays several key roles in the Sherlock Protocol ecosystem:
  • Governance: SHER is the protocol’s governance token. This means SHER holders can participate in major protocol decisions in the future, such as adjusting parameters or proposing new features.
  • Incentives: SHER is used to incentivize ecosystem participants. For example, stakers provide coverage funds by staking stablecoins (like USDC). In addition to receiving premiums paid by protocols and external yields (such as interest from Aave, Compound, etc.), they also earn SHER as extra rewards. Security teams (Watsons) who perform well in audits also receive SHER as compensation.
  • Coordinating Watsons: In the long run, SHER may help manage Watson allocation and key protocol parameters.
• Current and future circulation: Currently, SHER may not be widely listed on mainstream crypto exchanges, so its circulating supply and price data may be incomplete or hard to obtain. This also means its market liquidity may be low.

Please note: Tokenomics is a complex and dynamic field. The above information is a summary based on available sources. The value of the token is affected by many factors, including market supply and demand, project development, macroeconomic environment, etc., and is highly volatile. This is not investment advice.

Team, Governance, and Funding

Team

The core team of Sherlock Protocol consists of experienced professionals:

• Jack Sanford: Co-founder. He has extensive experience in DeFi security, has served on the security committees of several top teams, and has spoken at multiple industry conferences.
• Evert Kors: CTO and co-founder. He has a background in computer science, was an early security engineer at a malware sandbox company, and has experience in smart contract development for early DeFi protocols. He also played a key role in developing Sherlock AI.

Team members have deep backgrounds in AI, cybersecurity, and smart contract development, which is crucial for building a complex security protocol.

Governance

Sherlock Protocol’s governance mechanism is gradually decentralizing:

• Multisig wallet: In the early stages, key functions such as protocol upgrades, pausing, and adding/removing covered protocols are managed by a “multisig wallet” controlled by the Sherlock core team. A multisig wallet requires approval from a majority of authorized signers, which is safer than single-point control.
• Transition to DAO: As the protocol matures, these functions will gradually be handed over to a decentralized autonomous organization (DAO), giving SHER holders greater decision-making power.
• Claims Committee: Sherlock Protocol has a “Claims Committee” (Sherlock Protocol Claims Committee, SPCC), composed of core team members and well-known security experts, responsible for initial claim rulings. If the protocol disagrees, it can appeal to UMA Optimistic Oracle for a final decision—a more decentralized arbitration mechanism where many token holders vote.

Funding

Sherlock Protocol was founded in 2021 and has raised $5.5 million in seed funding. Investors include IDEO CoLab and Archetype. This shows the project has received some early capital support.

Roadmap

The Sherlock Protocol roadmap focuses on continuous optimization and expansion of its core business—smart contract security auditing and coverage.

• Key historical milestones:
  • 2021: Sherlock Protocol founded, core protocol launched, began offering smart contract audit and financial coverage services.
  • Launch of hybrid audit model: Combining deep audits by senior Watsons and broad global audit competitions.
  • Introduction of financial coverage mechanism: Providing compensation for audited protocols, aligning Sherlock’s interests with protocol security.
  • Collaboration with UMA: Introducing third-party arbitration to ensure fairness in claims rulings.
• Future plans:
  • Continuous improvement of audit products: Ongoing optimization of audit competition processes and tools to improve efficiency and accuracy in finding vulnerabilities.
  • Becoming the “final audit checkpoint”: Aiming to be the “final exam” before protocols go live on mainnet, ensuring maximum code security and providing ongoing coverage after launch.
  • Exploring adjacent products: May launch other products or features related to existing security services to further enhance the Web3 security ecosystem.
  • Deepening decentralized governance: Gradually transferring more governance power to the DAO formed by SHER holders.
  • Further development of Sherlock AI: Continued development and integration of AI technology for more efficient and intelligent vulnerability analysis.

Overall, the Sherlock Protocol roadmap revolves around the core goal of “continuously improving Web3 security,” with ongoing iteration and innovation in its audit and coverage services.

Common Risk Reminders

Every blockchain project comes with risks, and Sherlock Protocol is no exception. When learning about this project, we need to remain objective and cautious. Here are some common risk points:

• Technical and security risks:
  • Smart contract vulnerabilities: Although Sherlock aims to find vulnerabilities, its own smart contracts may have unknown flaws. If attacked, it could affect the protocol’s operation and fund safety.
  • Limitations of audits: Even top audits can’t guarantee 100% detection of all vulnerabilities. Complex smart contract systems may have unpredictable interaction risks.
  • Oracle risk: In claims rulings, if relying on external data (like UMA Optimistic Oracle), the accuracy and attack resistance of the oracle are critical.
• Economic risks:
  • Not fully collateralized: Sherlock’s smart contract coverage is not fully collateralized, meaning the staker pool may be less than the total coverage promised. If a large-scale hack occurs and payouts far exceed the pool, stakers may face losses.
  • Staker fund slashing: Stakers must lock up funds for a period to earn returns and bear risk. If a covered protocol suffers a major vulnerability, part of staker funds may be “slashed” for compensation.
  • Token price volatility: As a governance and incentive token, SHER’s price is affected by market supply and demand, project progress, overall crypto market sentiment, and more, and can be highly volatile.
  • Uncertain returns: Staker yields (APY) are composed of several parts, with protocol premiums and external yields being variable and possibly lower than expected.
• Compliance and operational risks:
  • Regulatory uncertainty: Global regulation of crypto and DeFi is still evolving, and future policy changes may impact Sherlock’s operations.
  • Centralization risk in governance: Before full decentralization, the core team’s multisig wallet still holds significant authority, posing some centralization risk.
  • Competition risk: The smart contract security field is highly competitive, and Sherlock must keep innovating to maintain its edge.

Important note: The above risks are not exhaustive, and crypto investment is highly risky. Before making any decisions, be sure to conduct thorough independent research (DYOR) and carefully assess your own risk tolerance.

Verification Checklist

As a rigorous blockchain researcher, when evaluating any project, we need to personally verify some key information. Here are some links and metrics you can check:

• Block explorer contract address: Find the SHER token contract address on Ethereum, as well as the core Sherlock Protocol smart contract addresses. Through block explorers (like Etherscan), you can view token supply, holder distribution, transaction history, and contract interactions.
  • SHER token contract address (please search for the latest accurate info on Etherscan or similar platforms, e.g.: 0xbcbf...4e39d8e was mentioned as SLOCK’s contract address, but SHER’s contract address needs further confirmation, or check Sherlock Protocol’s official announcement).
• GitHub activity: Check Sherlock Protocol’s GitHub repositories for code update frequency, commit history, issue resolution, and community contributions. An active GitHub usually means ongoing development and maintenance.
  • Sherlock V2 core contract repo: https://github.com/sherlock-protocol/sherlock-v2-core
  • Sherlock docs repo: https://github.com/sherlock-protocol/sherlock-docs
• Official website and documentation: Carefully read the project’s official website and technical docs (usually called Docs)—these are the most comprehensive and authoritative sources.
  • Sherlock Protocol official website: https://www.sherlock.xyz
  • Sherlock V2 docs: https://docs.sherlock.xyz/ (this link is speculative, please refer to the actual link on the official site)
• Community activity: Follow the project’s activity on Twitter, Discord, Medium, and other social/community platforms to gauge discussion, team-community interaction, etc.
• Audit reports: Check whether Sherlock Protocol itself has undergone third-party security audits—this is especially important for a security project.

Project Summary

Sherlock Protocol (SHER) is an innovative project in decentralized finance (DeFi) dedicated to improving smart contract security. By combining “hybrid audit” and “financial coverage,” it offers a one-stop security solution for DeFi protocols.

You can think of it as the “Sherlock Holmes detective agency” plus “insurance company” of the DeFi world. It organizes top “detectives” (Watsons) to hunt for smart contract vulnerabilities and provides “insurance” for audited protocols—if a security incident occurs, compensation is available.

The SHER token serves as the protocol’s governance and incentive tool, aiming to coordinate all ecosystem participants and gradually achieve decentralized governance.

The emergence of Sherlock Protocol undoubtedly brings new ideas and solutions to DeFi security, attempting to build a more trustworthy blockchain environment through economic incentives and multi-party collaboration. However, like all emerging technologies, it also comes with technical, economic, and operational risks, such as staker fund slashing, non-full collateralization, and token price volatility.

In summary, Sherlock Protocol is a project worth watching, making valuable efforts to address DeFi security pain points. But remember, the blockchain world is full of opportunities and risks. Today’s introduction is just a preliminary overview—I hope it helps you gain a clear and simple understanding of Sherlock Protocol. If you’re interested in this project, be sure to conduct deeper research (Do Your Own Research, DYOR), read the official docs and latest info, and carefully assess all potential risks. This is not investment advice.