Blockchain technology has come a long way since its inception, with the rise of decentralized finance (DeFi) leading the charge. However, with the rise of this technology, security risks have also increased. To help mitigate these risks, New York-based start-up Chaos Labs has developed an automated risk management platform.
PayPal, the payments giant, and investment management firm Galaxy have now invested $20 million in seed funding to help Chaos Labs further automate its platform. The funding round saw participation from 23 organizations, including Coinbase Ventures, Polygon, Avalanche, OpenSea UniSwap, and Balaji Srinivasan.
Protecting Crypto Protocols against External Exploits
Chaos Labs' platform is designed to protect crypto protocols against external exploits and risks. The platform offers agent and scenario-based simulations, which helps secure protocols against economic vulnerabilities and market manipulation events.
The company's founder and CEO, Omer Goldberg, believes that financial risk management must be upgraded to cater to the DeFi ecosystem. "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," said Goldberg.
9/ “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”. — Chaos Labs (@chaos_labs) February 21, 2023
Optimized Risk and Capital Efficiency
The official website states that Chaos Labs' risk suite can help protect DeFi protocols through optimized risk and capital efficiency, streamlined risk assessments, and streamlined risk assessments.
This investment from PayPal and Galaxy will help the company further automate its on-chain risk optimization.
PayPal's Interest in the Crypto Ecosystem
PayPal's interest in the crypto ecosystem was highlighted when the company was found to be holding a significant part of its financial liabilities in cryptocurrencies offered to its customers.
Bitcoin accounts for $291 million in the firm's asset breakdown, with $250 million in ETH. The remaining $63 million includes Litecoin and Bitcoin Cash combined. The investment from PayPal and Galaxy in Chaos Labs is a significant step forward in the efforts to secure the DeFi ecosystem.
With the rise of DeFi, security risks have also increased, and companies like Chaos Labs are working to mitigate these risks and make the DeFi ecosystem more secure for all participants.