diff --git a/libp2p/crypto/authenticated_encryption.py b/libp2p/crypto/authenticated_encryption.py
new file mode 100644
index 0000000..f84ecb7
--- /dev/null
+++ b/libp2p/crypto/authenticated_encryption.py
@@ -0,0 +1,120 @@
+from dataclasses import dataclass
+import hmac
+from typing import Tuple
+
+from Crypto.Cipher import AES
+
+
+class InvalidMACException(Exception):
+    pass
+
+
+@dataclass(frozen=True)
+class EncryptionParameters:
+    cipher_type: str
+    hash_type: str
+    iv: bytes
+    mac_key: bytes
+    cipher_key: bytes
+
+
+class MacAndCipher:
+    def __init__(self, parameters: EncryptionParameters) -> None:
+        self.authenticator = hmac.new(
+            parameters.mac_key, digestmod=parameters.hash_type
+        )
+        cipher = AES.new(
+            parameters.cipher_key, AES.MODE_CTR, initial_value=parameters.iv
+        )
+        self.cipher = cipher
+
+    def encrypt(self, data: bytes) -> bytes:
+        return self.cipher.encrypt(data)
+
+    def authenticate(self, data: bytes) -> bytes:
+        authenticator = self.authenticator.copy()
+        authenticator.update(data)
+        return authenticator.digest()
+
+    def decrypt_if_valid(self, data_with_tag: bytes) -> bytes:
+        tag_position = len(data_with_tag) - self.authenticator.digest_size
+        data = data_with_tag[:tag_position]
+        tag = data_with_tag[tag_position:]
+
+        authenticator = self.authenticator.copy()
+        authenticator.update(data)
+        expected_tag = authenticator.digest()
+
+        if not hmac.compare_digest(tag, expected_tag):
+            raise InvalidMACException(expected_tag, tag)
+
+        return self.cipher.decrypt(data)
+
+
+def initialize_pair(
+    cipher_type: str, hash_type: str, secret: bytes
+) -> Tuple[EncryptionParameters, EncryptionParameters]:
+    """
+    Return a pair of ``Keys`` for use in securing a
+    communications channel with authenticated encryption
+    derived from the ``secret`` and using the
+    requested ``cipher_type`` and ``hash_type``.
+    """
+    if cipher_type != "AES-128":
+        raise NotImplementedError()
+    if hash_type != "SHA256":
+        raise NotImplementedError()
+
+    iv_size = 16
+    cipher_key_size = 16
+    hmac_key_size = 20
+    seed = "key expansion".encode()
+
+    result = bytearray(2 * (iv_size + cipher_key_size + hmac_key_size))
+
+    authenticator = hmac.new(secret, digestmod=hash_type)
+    authenticator.update(seed)
+    tag = authenticator.digest()
+
+    i = 0
+    while i < len(result):
+        authenticator = hmac.new(secret, digestmod=hash_type)
+
+        authenticator.update(tag)
+        authenticator.update(seed)
+
+        another_tag = authenticator.digest()
+
+        remaining_bytes = len(another_tag)
+
+        if i + remaining_bytes > len(result):
+            remaining_bytes = len(result) - i
+
+        result[i : i + remaining_bytes] = another_tag
+
+        i += remaining_bytes
+
+        authenticator = hmac.new(secret, digestmod=hash_type)
+        authenticator.update(tag)
+        tag = authenticator.digest()
+
+    half = len(result) / 2
+    first_half = result[:half]
+    second_half = result[half:]
+
+    return (
+        EncryptionParameters(
+            cipher_type,
+            hash_type,
+            first_half[0:iv_size],
+            first_half[iv_size : iv_size + cipher_key_size],
+            first_half[iv_size + cipher_key_size :],
+        ),
+        EncryptionParameters(
+            cipher_type,
+            hash_type,
+            second_half[0:iv_size],
+            second_half[iv_size : iv_size + cipher_key_size],
+            second_half[iv_size + cipher_key_size :],
+        ),
+    )