Start-up company Chaos Labs, a platform for testing applications under extreme conditions in the DeFi blockchain, has raised $20 million in seed funding, led by the investment fund Galaxy Digital, which specializes in investments in crypto field, and PayPal Ventures, the investment arm of the international payments giant with participation from Coinbase, Uniswap, Lightspeed, Bessemer, Hashkey and top angels such as Balaji Srinivasan and Naval Ravikant. Chaos Labs will use the funding to expand its offerings and build out its suite of risk and security products. In its first year of operations, Chaos Labs has partnered with major Decentralized Finance (“DeFi”) customers, including Aave, Chainlink, Uniswap, BENQI, and Osmosis, to secure and optimize the protocols against manipulation and black swan market events, while also offering capital optimization recommendations.
Chaos Labs was founded at the end of 2021 by Goldberg, a former director of development at Facebook and Instagram. The company employs 25 people, most of them in the development center in Tel Aviv and the rest in the offices in New York.
Chaos Labs founder and CEO Omer Goldberg said, “As the world moves from the opacities of traditional finance to a more open DeFi system, financial risk management must advance accordingly. At Chaos Labs, we believe that every DeFi protocol must regularly conduct robust risk testing to verify and validate that their economic system is secure against hackers and unanticipated volatility. We’ve built a team of expert security and infrastructure engineers, and we’re working to solve for this by bringing world-class security and risk practices in running simulations of millions of economic scenarios on-chain.”
“Protecting crypto protocols against economic system exploits and insufficient risk parameters has never been more critical, and new security paradigms are required. According to The Block, total funds lost in 2022 to DeFi exploits reached $2.05 billion, a 48% increase from 2021, as malicious actors and nation-states use increasingly creative methods to exploit on-chain protocol vulnerabilities. Chaos Labs was founded to solve this, securing protocols against economic vulnerabilities and market manipulation events. The company is the first automated risk management platform for crypto, operating best-in-class security practices, including robust agent- and scenario-based simulations. Working with Chaos Labs, teams can optimize capital efficiency and more quickly adapt to ever-dynamic crypto markets – helping them stay competitive without compromising on the security of their protocol.” Goldberg added.
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