Despite the turbulence that has been seen in the market recently, cryptocurrency companies continue to attract new financing. On Tuesday, February 21, Chaos Labs announced (1) they had secured $20 million in funding, with PayPal and Galaxy Digital as the primary investors.
Chaos Labs Funding
Several market participants, including Coinbase, Lightspeed, Uniswap, Bessemer, and Hashkey, and prominent financiers such as Naval Ravikant and Balaji Srinivasan, took part in the investment round.
"Chaos Labs is the first automated, on-chain economic security system enabling crypto protocols to optimize risk management and capital efficiency," as per their website. (2)
The cryptocurrency company has stated that it intends to put these monies into expanding the range of risk and security solutions that it offers. During their first year of business, Chaos Labs partnered with customers in the decentralized finance (DeFi) industry.
Names such as Chainlink, Aave, Uniswap, BENQI, and Osmosis are included in this category. The procedures were supposed to be protected from manipulation and "black swan" market occurrences, and they were supposed to be optimized.
Thefts of cryptocurrencies have been steadily increasing, particularly in the DeFi markets. The DeFi market suffered losses of more than $2.05 billion due to criminal activity in the previous year (2022).
Actors intent on harming have developed novel strategies to exploit weaknesses in on-chain protocols. Consequently, defending crypto protocols against abuses of economic systems has become a far higher priority.
Addressing Concerns About the Safety of Crypto Techniques
Chaos Labs is dedicated to finding solutions to challenges like these by safeguarding protocols against market manipulation. It is the first platform to offer automated risk management for cryptocurrency.
Chaos Labs uses industry-leading security measures, including sophisticated agents and circumstance simulations, to protect its operations. Omer Goldberg, CEO and Founder of Chaos Labs, made the following announcement in response to the latest development:
"As the world advances away from the opaque nature of traditional banking and toward the more transparent system of decentralized finance, risk management in finance must evolve in tandem with this shift.
We at Chaos Labs believe that every DeFi protocol ought to constantly carry out exhaustive risk testing to verify and authenticate that their monetary system is safe from attack by hackers and unanticipated price fluctuations.
We've assembled an experienced team of security and network engineers, and we're working to solve this problem by applying world-class security and risk procedures to the simulation of millions of different economic scenarios on the blockchain."
The risk solution platform by Chaos Labs provides various services, including faster risk assessments, spend efficiencies, asset utilization and risk management, and many more.
Services Offered by Chaos Labs
The software developed by Chaos Labs meets the requirements of the cryptocurrency industry for on-chain risk monitoring and mitigation. It offers other services like:
Risk and Capital Optimization: Chaos Labs gives teams and community protocol-specific simulations to explore how parameter settings affect protocol economic efficiency and risk. Chaos Labs' situation simulation engine can assess and provide risk mitigation methods for specific assault strategies. The method and inputs are disclosed to make testing and output results apparent.
Risk assessments: Economic vulnerability-focused smart contract examination. Developers trying out new economic models and cash flow might engage with Chaos Labs to investigate how market movements (e.g., liquidity, oracles, volatility) may affect or break their protocols' economic design.
Spending: DEXs strive to increase user liquidity to increase trading volume. Chaos Labs' simulation engine enables protocol teams proactively manage incentive expenditure to maximize ROI on smaller budgets, prolonging the runway through uncertain markets.