coindesk.com
Chaos Labs is known for its tools for on-chain risk management, addressing growing demand for such services in decentralized finance (DeFi).
The fundraising was led by venture capital firm Haun Ventures.
Chaos Labs, a New York crypto startup known for its suite of on-chain risk management tools, has raised $55 million in a Series A funding round led by the venture capital firm Haun Ventures.
The influx of capital comes as Chaos Labs, founded in 2021, looks to expand its platform, designed to address the growing need for automated risk management in decentralized finance (DeFi).
The project has tripled its customer base in the past year, helping more than 20 protocols including Aave, GMX and Jupiter to secure, monitor and grow their products, according to a statement.
The funding round attracted a mix of familiar faces and new backers, with participants including F-Prime Capital, Slow Ventures and Spartan Capital, alongside larger investors like Lightspeed Venture Partners, Galaxy Ventures and PayPal Ventures. Chaos Labs was also backed by angel investors such as Solana’s Anatoly Yakovenko and Phantom’s Francesco Agosti.
While DeFi protocols continue to grow in popularity, their susceptibility to market volatility and risk remains top-of-mind for many investors, particularly those from the traditional financial world. Chaos Labs is positioning itself as a key player in tackling these challenges by offering real-time data and risk assessment tools, areas where DeFi tends to lag behind centralized finance.
DeFi platforms – like on-chain lending markets and futures exchanges – are subject to similar risk considerations as legacy financial services: When market conditions change, DeFi platforms need to update certain parameters, like collateral requirements and liquidation ratios, to keep customers safe.
But even in the "decentralized" world of blockchains, the task of managing risk is frequently offloaded to companies or select individuals, which can cause errors and slowdowns – not to mention centralization concerns.
"Today, all applications on DeFi on-chain are basically static and have stale parameter configuration," said Omer Goldberg, Founder and CEO at Chaos Labs. "On average, it takes 72 to 96 hours from the moment that a risk manager detects that changes needed to be made until they're actually propagated on-chain."
Chaos Labs – with its dashboards, real-time data oracles, risk alerts and other tools – aims to automate certain risk management tasks to make DeFi platforms more responsive to market volatility, and less susceptible to human error.