Author: Frank, PANews
Chaos Labs, a New York-based crypto startup focused on on-chain risk management tools, recently announced the completion of a $55 million Series A round of financing. The $55 million makes Chaos Labs the most funded startup in the crypto space in recent times, but this company, which is favored by capital, does not seem to be well known to the public and is rather mysterious.
Chaos Labs' current round of financing was led by Haun Ventures, with participation from well-known investment institutions such as F-Prime Capital, Slow Ventures, and Spartan Capital, as well as large investors such as Lightspeed Venture Partners, Galaxy Ventures, and PayPal Ventures. Chaos Labs also received support from angel investors such as Anatoly Yakovenko of Solana and Francesco Agosti of Phantom. It is worth mentioning that Haun Ventures is the lead investor in Chaos Labs' current round of financing. Katie Haun, the founder of Haun Ventures, was a general partner of a16z. Haun Ventures has also invested in projects such as OpenSea, Zora, and Aptos Labs.
In 2023, Chaos Labs received $20 million in seed funding led by PayPal Ventures and Galaxy Digital. So far, the company has received a total of $75 million in financing.
The founder was a special forces soldier and earned millions of dollars by building his own Monte Carlo simulation system
Omer Goldberg has a rich resume. He served in the Israeli Special Forces from 2009 to 2012 as a combat soldier in the "Nahal" Special Forces Reconnaissance Unit. In 2015, he graduated from the Israel Institute of Technology (Technion) with a bachelor's degree in Information Systems Engineering. After graduation, Omer Goldberg independently developed a dark web analysis engine, built a full-stack web application and dark web crawler to discover, analyze and classify dangerous documents that may be found online. He also assisted the Paris police in collecting field intelligence on domestic threats.
Omer Goldberg then worked as an engineer at companies such as Facebook and Instagram until he started his own business in July 2021.
After receiving the Series A funding, Omer Goldberg shared Chaos Labsâ entrepreneurial journey on Twitter.
Omer Goldberg started mining Bitcoin in his dorm room ten years ago, and thus came into contact with the crypto field. He first started with altcoin investment portfolios, optimizing LP allocations to maximize returns and minimize risks, and built a Monte Carlo simulation system that can run blockchain agents on a large scale.
When MakerDAO needed a simulation testing infrastructure, Omer Goldberg realized the commercial demand for this product. He then built a cloud developer platform that runs agent-based Monte Carlo simulations, provided SaaS services, and earned millions of dollars in revenue in a short period of time.
In 2021, Omer Goldberg led the team to officially establish Chaos Labs, initially employing nearly 25 employees, most of whom were his friends in the Israeli army.
In an interview with Fortune, Omer Goldberg stated that Chaos Labsâ software can â100%â prevent Eisenberg attacks (Eisenberg attack refers to a market manipulation behavior in the cryptocurrency field, named after Avraham Eisenbergâs attack on the Mango Markets platform in October 2022)â.
âAs cryptocurrency development accelerates and the complexity of the environment continues to grow, the scope for potential vulnerabilities and hacks continues to expand,â said Amman Bhasin, partner at PayPal Ventures, an investor in Chaos Labsâ seed round, in a statement. âChaos Labs addresses this problem by providing a suite of risk management and optimization tools for protocols, investors, and users.â
Chaos Labs' initial main business was to stress test DeFi protocols and simulate worst-case scenarios by building "chaos engineering". As the complexity of the security environment in the crypto field continues to increase, Chaos Labs has also expanded its business types to include risk management, risk oracles, analytical tools, incentive optimization, witch detection, etc.
Served Layer Zero to screen out 800,000 witches and served the leading projects in the DeFi field
Chaos Labs has attracted the attention of the community this year. In May of this year, it was responsible for the Sybil monitoring mechanism and screening work of Layer Zero, the largest anti-sybil mechanism, and screened out more than 800,000 Sybil addresses. In addition, well-known projects in the DeFi field such as Aave, GMX, Arbitrum, dYdX, and Jupiter are all Chaos Labs customers. Jupiter's risk platform, dYdX's ecological reward mechanism, and Aave's risk parameter adjustment plan are all from Chaos Labs.
Before receiving investment in the early stage, Chaos Labs had received multiple grants from Chainlink, Uniswap, dYdX, and AAVE. The main reason for the grants was to help these DeFi projects conduct isolation tests and constructive proposals. These included launching the "Adjust Risk Parameters" proposal in the Aave community; the dYdX Chain incentive plan; and the Uniswap V3 risk management solution.
At present, security incidents in the encryption field have developed to a point that cannot be ignored. According to the monitoring of Beosin Alert, a blockchain security audit company, in July 2024, the amount of losses from various security incidents increased significantly compared with June. In July 2024, more than 20 typical security incidents occurred, and the total loss amount caused by hacker attacks, phishing scams and rug pulls reached 286 million US dollars, an increase of about 56.3% from June. Among them, the attack incidents were about 271 million US dollars, an increase of about 92.2%; the largest incident came from the Indian exchange WazirX, with a loss of about 230 million US dollars, accounting for 85% of the amount of the attack incidents that month. The second largest attack incident was LI.FI, which lost about 11.6 million US dollars due to a contract vulnerability.
Against this backdrop, Chaos Labs has also seen a huge increase in business. According to Chaos Labs officials, "Over the past year, the number of Chaos Labs customers has tripled, with more than 20 protocols including Aave, GMX, and Jupiter relying on Chaos Labs' technology to secure, monitor, and expand their products. To date, Chaos Labs' technology has secured $860 billion in cumulative trading volume, $25 billion in loans, and $35 million in rewards."
As of now, with the continued development of the DeFi industry and the emergence of increasingly complex security risks in various protocols, it seems that companies like Chaos Labs that sell shovels have greater commercial potential.