On-chain risk control company Chaos Labs, which secured $55 million in funding: the founder is a former Israeli special forces member, designing an anti-witch mechanism for Layer Zero
The amount of 55 million dollars makes Chaos Labs the most funded startup in the recent cryptocurrency sector, but this capital-favored company seems to be relatively unknown to the public, shrouded in mystery.Author: Frank, PANews
The New York-based crypto startup Chaos Labs, focused on on-chain risk management tools, recently announced the completion of a $55 million Series A funding round. This amount makes Chaos Labs one of the most funded startups in the crypto space recently, yet this capital-favored company seems to remain relatively unknown to the public, shrouded in mystery.
This round of funding 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 like Lightspeed Venture Partners, Galaxy Ventures, and PayPal Ventures. Chaos Labs also received support from angel investors including Solana's Anatoly Yakovenko and Phantom's Francesco Agosti. Notably, Haun Ventures, the lead investor in this round, was founded by Katie Haun, a former general partner at a16z. Haun Ventures has also invested in projects like OpenSea, Zora, and Aptos Labs.
In 2023, Chaos Labs previously secured $20 million in seed funding led by PayPal Ventures and Galaxy Digital. To date, the company has raised a total of $75 million.
Founder with Special Forces Background Builds Monte Carlo Simulation System for Millions in Revenue
Omer Goldberg has an impressive background, having served in the Israeli Special Forces from 2009 to 2012 as a combat soldier in the "Nahal" reconnaissance unit. He graduated with a degree in Information Systems Engineering from the Technion in 2015. After graduation, Omer Goldberg independently developed a dark web analysis engine, building a full-stack web application and dark web crawler to discover, analyze, and categorize potentially dangerous documents found online. He also assisted the Paris police in gathering field intelligence on domestic threats.
Subsequently, Omer Goldberg worked as an engineer at companies like Facebook and Instagram until he started his own venture in July 2021.
After securing Series A funding, Omer Goldberg shared the entrepreneurial journey of Chaos Labs on Twitter.
Ten years ago, Omer Goldberg began mining Bitcoin in his dormitory, which led him to the crypto space. Initially, he focused on altcoin investment portfolios, optimizing LP configurations for maximum returns and minimal risk, and built a Monte Carlo simulation system based on blockchain agents that could run at scale.
Later, when he encountered MakerDAO's need for simulated testing infrastructure, Omer Goldberg realized the commercial demand for such a product. He then established a cloud developer platform running agent-based Monte Carlo simulations, providing SaaS services and quickly generating millions in revenue.
In 2021, Omer Goldberg officially founded Chaos Labs, initially hiring nearly 25 employees, most of whom were friends from his time in the Israeli military.
In an interview with Fortune, Omer Goldberg stated, "Chaos Labs' software can '100%' prevent attacks like Eisenberg's" (the Eisenberg attack refers to a market manipulation tactic in the crypto space named after Avraham Eisenberg, who executed an attack on the Mango Markets platform in October 2022).
PayPal Ventures is an investor in Chaos Labs' seed round, and partner Amman Bhasin stated in a statement, "As cryptocurrency development accelerates and the environment becomes increasingly complex, the potential for vulnerabilities and hacking is also expanding." "Chaos Labs addresses this issue by providing a suite of risk management and optimization tools for protocols, investors, and users."
Chaos Labs' initial primary business was to conduct stress testing and simulate worst-case scenarios for DeFi protocols through "chaos engineering." As the security landscape in the crypto space has become more complex, Chaos Labs has also expanded its business types to include risk management, risk oracles, analytical tools, incentive optimization, and witch detection.
Serving Layer Zero, Filtering Out 800,000 Witches, and Supporting Leading DeFi Projects
Chaos Labs gained community attention this year in May when it was responsible for the largest anti-witch mechanism, Layer Zero, filtering and monitoring over 800,000 witch addresses. Additionally, well-known projects in the DeFi space such as Aave, GMX, Arbitrum, dYdX, and Jupiter are clients of Chaos Labs. Jupiter's risk platform, dYdX's ecosystem reward mechanism, and Aave's risk parameter adjustment plan all originated from Chaos Labs.
Before securing early investments, Chaos Labs had already received multiple grants from Chainlink, Uniswap, dYdX, and AAVE, primarily to assist these DeFi projects with isolation testing and constructive proposals. This includes initiating the "Adjust Risk Parameters" proposal in the Aave community; the incentive plan for dYdX Chain; and the risk management solution for Uniswap V3.
Currently, security incidents in the crypto space have reached a level that cannot be ignored. Monitoring by blockchain security audit company Beosin Alert shows that in July 2024, the losses from various security incidents significantly increased compared to June. In July 2024, over 20 typical security incidents occurred, with total losses from hacking, phishing scams, and rug pulls amounting to $286 million, an increase of approximately 56.3% from June. Among these, attack incidents accounted for about $271 million, an increase of approximately 92.2%; the largest incident came from the Indian exchange WazirX, with losses of about $230 million, accounting for 85% of the month's attack incident amount. The second-largest attack incident was LI.FI, which lost about $11.6 million due to a contract vulnerability.
Against this backdrop, Chaos Labs has also seen a significant increase in business. According to Chaos Labs' official statement, "In the past year, the number of Chaos Labs' clients has doubled, with over 20 protocols, including Aave, GMX, and Jupiter, relying on Chaos Labs' technology to secure, monitor, and scale their products. To date, Chaos Labs' technology has ensured a cumulative trading volume of $860 billion, $25 billion in loans, and $35 million in rewards."
Currently, as the DeFi industry continues to develop and various protocols face increasingly complex security risks, it seems that companies like Chaos Labs, which provide essential tools, have greater commercial potential.
