Highlights:
- The platform of Chaos Labs secures decentralized financial protocols against malicious activities with all preventive measures.
- Since its inception in October 2021, Chaos Labs collaborated with key DeFi industry clients.
Chaos Labs Inc., a crypto risk management platform, received seed funding worth USD 20 million in the investment round led by PayPal Ventures, the payments giant PayPal Holdings Inc.’s venture arm and Galaxy Digital, an investment management firm.
Almost 23 prominent investment firms and crypto companies participated in the round, including Uniswap, Coinbase Ventures, OpenSea, Lightspeed, Hashkey, and Polygon. Besides, six angel investors were also involved in the seed funding round.
The platform of Chaos Labs secures decentralized finance protocols against malicious activities with all preventive measures and monitoring the processes with the help of automated systems using proactive simulation. The platform offers processes to test input and output depending on the underlying system operation and simulate activities on the basis of events and attacks that could possibly happen. After assessing such scenarios, it recommends mitigations.
Decentralized finance or DeFi is a financial technology (fintech) working on decentralized blockchain ledgers that use self-executing smart contracts and peer-to-peer transactions to exclude intermediaries such as banks for complex and basic economic services. With the help of DeFi protocols, developers have generated decentralized economies that enable users to create savings accounts, token exchanges, securities, interest-bearing loans, market indexes, and more such facilities.
Omer Goldberg, Chief Executive and Founder of Chaos Labs, 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.”
As per the report from Chainalysis, DeFi protocols are specifically susceptible to hacking and exploitation. To put in numbers, DeFi protocols’ 73% of cryptocurrency was stolen in 2021 which went up to 82% in 2022 that incurred losses of USD 3.1 billion. The report also suggested that protocols must be tested for hacking and simulated attacks to prevent them.
Since its inception in October 2021, Chaos Labs collaborated with key DeFi industry clients such as yield-generating platform BENQI, DeFi lending platform Aave, trading platform dYdX, and crypto swap platform Osmosis. The risk engine of the platform has been deployed on Aave V3 to mitigate the risks and educate the communities about threat-related decisions and actions.
A partner at PayPal Ventures, Amman Bhasin, stated “As crypto development accelerates and the landscape grows in complexity, so does the range of potential exploits and hacks. Chaos Labs addresses this by arming protocols, investors, and users with a suite of risk management and optimization tools to protect against these vulnerabilities.”
PayPal has developed interest in crypto over the years after it started allowing users to transact cryptocurrencies from their individual accounts in 2020. It also acquired Curv Inc., a digital asset startup that develops digital asset security infrastructure technology. Last year, the company offered users the option of transferring cryptocurrency off the platform and into their wallets.
