Chaos Labs receives $20 million in seed funding
Chaos Labs founder and CEO Omer Goldberg used to be a member of the Israeli special forces. Courtesy of Chaos Labs
Chaos Labs, a blockchain risk analysis firm whose team includes former members of the Israeli special forces, announced Tuesday that it has received $20 million in seed funding in a round led by PayPal Ventures and Galaxy Digital.
The nearly two-year-old company specializes in running worst-case scenario simulations for decentralized financial trading platforms. Other participants in the round include Coinbase, Uniswap, Lightspeed, Bessemer and angel investors such as Balaji Srinivasan and Naval Ravikant.
“We built a Web3 cloud where we can replicate all the blockchains that our customers run on,” Omer Goldberg, founder and CEO of Chaos Labs, told Fortune. “And we can interact with their application in exactly the same way that they’re going to interact with it in real life.”
Chaos Labs’ unusually large seed funding comes after a year of crypto hacks, collapses and exploits, including the infamous Mango Markets exploit, where hacker Avraham Eisenberg exploited weaknesses in the crypto trading platform to make off with $116 million in assets. The US Securities and Exchange Commission later charged Eisenberg with fraud and market manipulation.
Goldberg told Fortune that Chaos Labs’ software could have “100%” prevented Eisenberg’s attack, which is likely why the company’s 10 public clients include some of the biggest names in DeFi, including Aave, Chainlink and Uniswap. Nearly $3 billion in crypto assets were lost to hacks and exploits in 2022, according to CoinGecko.
“As crypto development accelerates and the landscape grows in complexity, so does the range of potential exploits and hacks,” Amman Bhasin, a partner at PayPal Ventures, said in a statement. “Chaos Labs solves this by arming protocols, investors and users with a range of risk management and optimization tools.”
Goldberg, who spent four years after high school in the Israeli special forces, comes from a big tech background. He used to be an engineer at Facebook and Instagram, where he learned about common risk mitigation strategies, including chaos engineering, a method for stress testing computer programs and simulating worst-case scenarios. (Chaos Labs borrows its name from the technique.)
In 2021, he built his own DeFi protocol, or trading platform. Before opening his project to the public, he decided to stress test what he had programmed. While he was building his “chaos engineering” tools, other protocols heard about his relatively involved testing methods and asked him to stress test their trading platforms.
He soon pivoted and founded Chaos Labs. Since then, he has hired nearly 25 employees, most of whom are friends or contacts from his time in the Israeli military. He said his annual income is in the “millions”.
“Crypto, blockchain, DeFi, whatever you want to call it, is going to be a big part of the future of finance,” he said Fortune. “And there’s no way that can be true without having tools that are best in class or at least provide the same assurances as their traditional financial peers.”
