PayPal and Galaxy Investment Management have collaborated to raise $20 million in seed funding for Chaos Labs, a New York-based cloud platform that uses an automated risk management platform to protect crypto protocols against external risks and exploits. With the funding, Chaos Labs will aim to automate on-chain risk optimization, which will offer agent and scenario-based simulations to help secure protocols against economic vulnerabilities and market manipulation events.
Chaos Labs’ founder and CEO, Omer Goldberg, emphasized that decentralized finance (DeFi) ecosystems require upgraded financial risk management. He stated, “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.”
The seed funding saw participation from 23 organizations and six angel investors, including Coinbase Ventures, Polygon, Avalanche, OpenSea UniSwap, and Balaji Srinivasan. As per the official website, Chaos Labs’ risk suite can help protect DeFi protocols through optimized risk and capital efficiency, streamlined risk assessments, and streamlined risk assessments.
PayPal has shown significant interest in the crypto ecosystem, as evidenced by the company’s holding a significant part of its financial liabilities in cryptocurrencies offered to its customers. By the end of 2022, PayPal held a total of $604 million in various cryptocurrencies, including Bitcoin, Ether, Litecoin, and Bitcoin Cash.
According to reports, PayPal has been actively working on introducing crypto features to its platform, with plans to enable customers to withdraw cryptocurrency to third-party wallets. The company also intends to launch a trading platform for cryptocurrencies in the US.
PayPal’s participation in the funding round for Chaos Labs signifies its continued interest and commitment to the crypto industry. The investment management firm Galaxy has also been actively involved in the crypto industry, having launched several funds focused on cryptocurrencies and blockchain technology.
The participation of such prominent organizations and investors in the funding round highlights the growing importance of risk management solutions for the DeFi industry. The use of blockchain technology and cryptocurrencies has introduced new risks and challenges that traditional risk management solutions may not be equipped to handle.