Chaos Labs Risk Contributor Proposal
Applicant Information
- Name of Applicant & Applicant’s Representative: Chaos Labs (Ori Nevo)
- Email Address: arbitrum@chaoslabs.xyz
- Telegram Handle (if applicable): @orinevo
- LinkedIn Profile (if applicable): Chaos Labs | LinkedIn
- Role being applied for: Risk Management-Oriented Member
Background Information [Applicable to all]
Please provide a brief overview of your experience in the digital asset industry and, more specifically, Ethereum & Arbitrum Ecosystems. Include any relevant projects, contributions, or roles within the ArbitrumDAO, if applicable. (400 words max)
Chaos Labs excels in risk management, economic security, mechanism design, and optimization for DeFi protocols, utilizing advanced simulations to assess protocol resilience under severe market conditions. Our team comprises esteemed researchers, engineers, and security experts with a proven track record in developing cutting-edge risk management solutions. We’ve managed trading venues with volumes in the hundreds of billions and portfolios worth tens of billions, significantly influencing DeFi advancements. Our expertise is from diverse fields, including traditional finance and cryptocurrency, bolstered by experiences at top tech firms like Google, Meta, and Microsoft and elite cyber-intelligence units. This unique mix positions Chaos Labs at the forefront of driving DeFi innovation with unique insights and expertise.
Our Approach to the ARDC Chaos Proposal
As firm believers in the long-term viability of DeFi ecosystems, we recognize that our business success depends on these ecosystems’ ability to nurture and grow successful applications that drive organic demand and growth. As a result, one of this council’s key duties is providing adequate resources and support for DAO ideas and initiatives. Keeping this in mind, we aim to offer a cost-effective and impactful bundle for the wider Arbitrum ecosystem, as is reflected in the bundle pricing and offering.
Chaos Labs Offerings and Previous Contributions
Our contributions to the security and optimization of premier protocols across the DeFi ecosystems are significant and varied. Highlights of our work include:
Risk Management for Top Arbitrum Protocols
Leading risk management and optimization for Aave and GMX, the top 2 protocols by Total TVL on Arbitrum. Our engagements with Aave, GMX, and Radiant center around ongoing risk parameter optimization, in-depth analyses, and the development of tailored frameworks to enhance the protocols’ resilience and efficiency, solidifying their positions as leaders in their respective spaces. Together, these protocols amass over $1 billion in TVL on Arbitrum, representing nearly 33% of the network’s total TVL.
Comprehensive Research and Mechanism Design at Chaos Labs
At Chaos Labs, we integrate advanced risk management with rigorous research, considering them fundamental to our approach. Recognizing the constant innovation within top DeFi protocols, we prioritize thorough research as the foundation of our client partnerships. A profound grasp of mechanism design is essential and integral to our methodology. As the proposed Risk partner for the ARFC, our dedication to research excellence is part of what we propose to contribute to the DAO. Below are highlights of our recent contributions:
- LST Market Risk Research with LiDo and Ethena
- dYdX Chain: Liquidity-Driven Permissionless Market Listings
Explore more about our work on our blog and research pages for a deeper insight into our expertise and contributions to the DeFi space.
Optimizing Growth Incentives for DeFi Protocols
Chaos Labs perceives growth and risk as two aspects of the same concept. As such, it emphasizes the sustainable growth of protocols and ecosystems. The objective of any incentive program is not merely to provide a temporary uplift for protocols but to foster their long-term expansion. Chaos Labs offers comprehensive incentive programs to stimulate this growth, using measurable progress and Key Performance Indicators (KPIs) as benchmarks. It has spearheaded initiatives for leading decentralized finance (DeFi) protocols and ecosystems.
Leading Risk and Design with Top DeFi Protocols and Ecosystems
Chaos Labs’ extensive client portfolio includes protocols like dYdX, Uniswap, Optimism, crvUSD, Compound, Ethena, Bluefin, Ostium, and more. Our strategies and frameworks have set new benchmarks in protocol safety and capital efficiency. Below is some of our recent research:
Please refer to our blog for more information.
Active Member of the Arbitrum Security Council
Our CEO, Omer Goldberg, actively participates in the Arbitrum Security Council. This highlights our dedication to strengthening the security of the Arbitrum ecosystem.
Proven Track Record of Excellence
Chaos Labs, through rigorous testing, extensive research, and in-depth risk assessments, has significantly contributed to strengthening the resilience and enhancing the performance of top DeFi protocols. Our expertise makes us a major contributor to digital asset platforms’ safety, stability, and success.
ARDC Risk Lead
Specify the subject-matter area(s) you are interested in contributing to within ARDC (e.g., Research, Framework Development, Risk Assessment, etc.). Explain why you believe your skills align with the chosen area(s). (500 words max)
Chaos Labs is deeply committed to contributing to Risk Assessment within the ARDC because we recognize the critical importance of identifying, evaluating, and mitigating risks in the rapidly evolving DeFi space. Robust risk assessment mechanisms are essential for blockchain ecosystems’ stability, security, and sustainability, particularly in environments as dynamic and innovative as Arbitrum.
Our expertise in risk assessment is built on a foundation of advanced analytical methodologies, comprehensive market understanding, and a proactive approach to security and risk management. Chaos Labs employs state-of-the-art simulation technology to model various market conditions, stress scenarios, and attack vectors, allowing us to anticipate potential vulnerabilities before they can be exploited. This preemptive strategy is critical in the DeFi space, where new risks emerge with every technological advancement and market shift.
Our team’s background is uniquely suited to the demands of risk assessment within the ARDC. With experience spanning leading tech firms, elite cyber-intelligence units, and frontline DeFi protocol development, we bring a multidisciplinary perspective to risk analysis. This blend of technical prowess, strategic insight, and practical experience in high-stakes environments enables us to devise innovative risk management strategies grounded in real-world applicability.
Moreover, our previous contributions to the Arbitrum and Ethereum ecosystems, through developing risk frameworks and optimization strategies for top-tier protocols, demonstrate our capability and commitment to enhancing protocol resilience and user safety. Our work has helped protocols navigate the complexities of the DeFi landscape and fostered greater trust and adoption among users.
Chaos Labs is motivated by the challenge of advancing the Arbitrum ecosystem’s risk assessment capabilities. Our research and analytical rigor, combined with our practical experience in managing and mitigating risks, aligns perfectly with the objectives of the ARDC. By contributing our skills to the collective, we aim to empower the Arbitrum community with the insights and tools needed to navigate the DeFi space confidently, ensuring the long-term health and success of the ecosystem.
Objectives & Motivation [Applicable to all]
What motivates you to join ARDC, and what do you hope to achieve as a member? (300 words max)
Our motivation to join the ARDC is rooted in our desire to contribute to the security, stability, and forward momentum of the DeFi space, specifically the Arbitrum ecosystem. At Chaos Labs, we are driven by the challenge of enhancing DeFi platforms, making them more secure and accessible. As members of the ARDC, we aim to leverage our extensive expertise in risk management and protocol optimization to foster a safer and more robust environment for all users within the Arbitrum ecosystem.
We aim to achieve a multifaceted impact through our membership in the ARDC. Firstly, we seek to elevate security and risk awareness among protocol developers, users, and community members, thereby reducing the incidence of vulnerabilities and financial losses. Secondly, by collaborating with other collective members, we aim to spearhead the development of innovative solutions and best practices that can be adopted across the ecosystem to address emerging challenges and opportunities. Lastly, we aspire to contribute to creating a more transparent and informed community where decision-making is driven by data, analysis, and a deep understanding of the complexities of the DeFi space.
By joining the ARDC, we envision contributing our skills and knowledge and learning from the community’s collective wisdom. Our ultimate goal is to play a pivotal role in shaping the future of the Arbitrum ecosystem, making it a safer and more innovative platform that leads by example in the broader blockchain and DeFi landscape.
Explain how you envision contributing to the primary mandate of ARDC, which is to provide objective assessment of ArbitrumDAO Forum proposals & discussions and expedite governance decision-making within the Arbitrum ecosystem. (300 words max)
Our strategy for contributing to the ARDC is aligned with its foundational goal: providing objective evaluations of ArbitrumDAO Forum proposals and facilitating faster governance decisions across the ecosystem. To this end, Chaos Labs will leverage our esteemed team of researchers and data scientists in a threefold approach:
- Rigorous Analysis: We will utilize our analytical expertise and technical knowledge to perform comprehensive reviews of proposals, specifically examining their implications for security, risk, and the overall health and advancement of the Arbitrum ecosystem. Our goal is to deliver balanced assessments that spotlight both merits and areas needing refinement, equipping proposers with constructive insights to fine-tune and advance their initiatives.
- Simplifying Complexity: Our team will distill complex technical data into digestible and actionable insights for the broader Arbitrum community. By clarifying intricate details and revealing the practical impacts of proposals, we aim to streamline the decision-making process, ensuring the prompt progression of impactful projects.
- Transparency, Engagement, and Dialogue: We are committed to an active presence in forum discussions, sharing our insights on developing trends, potential risks, and emerging opportunities within the decentralized finance (DeFi) sphere. Our participation is intended to nurture a culture of transparent communication and collective problem-solving, cultivating a community that is both more informed and actively involved.
Through this multifaceted contribution, Chaos Labs is dedicated to bolstering the ARDC’s mission to refine governance practices and elevate decision-making quality within the Arbitrum ecosystem, fostering an environment of security, efficiency, and innovation.
Skills and Experience [Applicable to all]
Provide details about your relevant skills and experience, including any previous work or contributions related to the subject-matter area(s) you are interested in within ARDC. (300 words max)
Chaos Labs offers a comprehensive suite of skills and experience to the ARDC, with a particular emphasis on security and risk management. Our capabilities are demonstrated through a solid history of crafting advanced risk assessment frameworks and managing risk for leading protocols in the DeFi space.
Our team comprises cybersecurity, data science, and blockchain technology experts, allowing us to address multifaceted challenges with holistic solutions. Our work includes detailed security audits and stress testing in diverse market scenarios to uncover vulnerabilities and devise strategic countermeasures.
We have established a record of meaningful collaborations with premier DeFi protocols, significantly bolstering their security frameworks and risk management approaches. Our contributions to the field are documented in several key pieces of research:
- Uniswap v3 TWAP: Assessing Oracle Market Risk
- Towards a Quantitative Interest Rates Framework
- Nexus Mutual V2 Economic Security Audit
- Ethena Perpetual Assessment Risk Report
- LST Market Risks on Ethena
These contributions underscore our dedication to advancing the DeFi space by improving security measures, risk management practices, and the overall robustness of protocols. Chaos Labs is poised to bring this wealth of experience to the ARDC, aiming to enhance the security, efficiency, and innovative capacity of the Arbitrum ecosystem.
Proposal Review & Assistance [Applicable to all]
Share what approach you would implement to conducting objective research and providing assistance to proposers to enhance their proposals. (300 words max)
Chaos Labs would implement a comprehensive and collaborative approach to conducting objective research and assisting proposers in enhancing their proposals for the Arbitrum ecosystem. This approach hinges on three core pillars: thorough analysis, actionable feedback, and community engagement.
Thorough Analysis
Initially, our team would deeply dive into each proposal, leveraging our security, risk management, and DeFi protocol optimization expertise. We employ data-driven analysis tools and methodologies to assess each proposal’s viability, economic-security implications, and potential risks. This involves evaluating the technical details, economic models, and potential impact on the Arbitrum ecosystem’s stability and growth.
Actionable Feedback
Based on our analysis, we would provide proposers with clear, constructive feedback to refine and strengthen their proposals. This feedback would highlight areas of concern and offer specific recommendations for improvement, focusing on enhancing security, reducing risk, and optimizing efficiency. We aim to ensure that proposals are practical, secure, and beneficial to the Arbitrum community.
Community Engagement
Recognizing the importance of community input, Chaos Labs would facilitate dialogue between proposers and the wider Arbitrum community. Our primary goal is to foster a collaborative environment where feedback from diverse stakeholders is integrated into proposal revisions. This engagement process helps proposers to understand different perspectives, refine their proposals based on collective insights, and build broader support within the community. Additionally, we focus on elucidating the risk aspects of proposals to the community, ensuring a deeper, more informed engagement with each proposal’s potential impact.
By applying this approach, Chaos Labs aims to contribute to developing high-quality, well-researched proposals that drive the Arbitrum ecosystem forward, ensuring that it remains at the forefront of innovation in the DeFi space.
Quantitative Assistance [Only applicable to Risk]
Explain how you can bring quantitative analysis skills to proposal evaluations and contribute to identifying and mitigating economic risks associated with proposed initiatives. (500 words max)
Chaos Labs possesses advanced quantitative analysis skills, pivotal for evaluating proposals and identifying and mitigating the economic risks inherent in proposed initiatives within the blockchain and DeFi ecosystems. Leveraging a combination of statistical modeling, data analytics, and financial theory, we provide a rigorous quantitative foundation to assess proposals’ viability, impact, and risk factors, ensuring that decisions are data-driven and aligned with the ecosystem’s long-term health and sustainability.
Our approach to quantitative analysis begins with a deep dive into the economic models underlying each proposal. By applying econometric models, simulation techniques, and sensitivity analysis, we can forecast the potential market responses, user behaviors, and network effects of implementing proposed changes or launching new initiatives. This predictive insight allows stakeholders to make informed decisions, weighing the benefits against potential risks.
Furthermore, we utilize scenario analysis to evaluate how proposals might perform under various market conditions, from stable to highly volatile environments. This method helps identify robust and resilient proposals capable of contributing positively to the ecosystem’s growth even in adverse conditions. By mapping out potential outcomes, we can pinpoint vulnerabilities and suggest preemptive measures to mitigate these risks.
Our team also employs stress testing to examine the resilience of proposals under extreme but plausible adverse scenarios. This involves altering key variables to extreme values and observing the effects on the proposal’s economic model. Stress testing is crucial for understanding the limits of a proposal’s stability and can lead to developing contingency plans to safeguard the ecosystem’s integrity.
In addition, Chaos Labs emphasizes the importance of liquidity analysis to ensure that proposals do not negatively affect asset liquidity within the ecosystem. Understanding the liquidity implications is essential for maintaining a healthy, functioning market, especially in DeFi, where liquidity constraints can lead to suboptimal outcomes.
Through these quantitative techniques, Chaos Labs aims to contribute significantly to the proposal evaluation process, providing the ARDC and the wider community with detailed analyses highlighting economic opportunities and risks and facilitating more robust and informed governance decisions.
Project Management [Applicable to all]
Describe your project management experience. (250 words max)
Chaos Labs boasts extensive project management experience characterized by our adept handling of complex, multidisciplinary projects. Our project management framework is rooted in agile methodologies, allowing us to adapt swiftly to the dynamic needs of blockchain technology and decentralized finance. This is complemented by our rigorous attention to detail and commitment to meeting project milestones, regardless of the project’s scale or complexity.
Our experienced team has successfully led numerous projects from inception to completion, coordinating closely with all stakeholders to ensure that all objectives are met within the stipulated timelines and budgets. Effective communication is a cornerstone of our project management, maintaining alignment on goals and progress among team and community members. We utilize various tools for smooth collaboration and progress tracking.
A prime illustration of our capabilities is our leadership in the dYdX Chain Launch Incentive program, a comprehensive $20 million liquidity incentives initiative over six months designed to grow and transition the dYdX user base to its latest protocol version. Chaos Labs has spearheaded this project from start to finish, beginning with the initial proposal to approve the program’s objectives and budget, followed by regular updates to the community, comprehensive reports, and proposals for on-chain rewards distribution.
Through our experiences, we have cultivated a profound understanding of the importance of stakeholder engagement, risk mitigation, and delivering solutions that meet and exceed expectations.
Purpose/Mandate of the ARDC [Applicable to all]
How do you intend to objectively contribute to achieving the purposes/mandate of the ARDC? (500 words max)
Chaos Labs is committed to objectively contributing to the ARDC, focusing on enhancing the security, efficiency, and innovation of the Arbitrum ecosystem. Our strategy is to leverage our expertise in quantitative analysis, risk assessment, and DeFi protocol optimization to support the ARDC’s goals and mandates in several key areas.
- Rigorous Quantitative Analysis: We plan to apply our advanced quantitative analysis skills to assess the economic and technical viability of proposals submitted to the ARDC. Using statistical modeling, data analytics, and financial theory, we aim to provide a solid foundation for evaluating proposals’ impacts and risks. This approach ensures decisions are informed, data-driven, and aligned with the long-term health and sustainability of the Arbitrum ecosystem.
- Comprehensive Risk Assessment: Chaos Labs intends to use our deep understanding of the DeFi landscape to conduct thorough risk assessments of proposed initiatives. Our team will identify potential vulnerabilities and economic risks, offering insights into how proposals could affect the ecosystem’s security and stability. We aim to help the ARDC and proposal authors understand and mitigate these risks before implementation.
- Supporting Transparent and Informed Decision-Making: Chaos Labs is dedicated to making the proposal evaluation process as transparent and informative as possible. We will provide detailed analyses and reports on proposals, making complex technical and economic information accessible to all stakeholders. This commitment to transparency will empower the ARDC and the wider community to make more informed governance decisions.
Additional Contributions [Applicable to all]
How can you contribute to the creation and enhancement of tools for security assessment, the development of educational materials, research into new mechanisms, delegate engagement, and growth initiatives, as outlined in ARDC’s objectives? (500 words max)
In our role within the ARDC, Chaos Labs plans to utilize our extensive suite of risk tools and expertise, drawing from our vast experience engaging with DAOs and protocol teams, to fulfill and exceed the objectives laid out by the ARDC. Our work, deeply embedded in the DeFi ecosystem, naturally includes several key areas outlined by the ARDC, especially in education, innovation, and governance.
Educational Content: We believe sharing knowledge is key to building safer and more engaged communities. As part of our engagements with our clients, we emphasize creating easy-to-understand research and educational pieces designed to suit various levels of technical understanding. Through this, we aim to simplify the intricacies of risk management, ensuring that these critical concepts are easily graspable by all stakeholders.
Research into New Mechanism: Our foundational work involves the investigation and development of novel mechanisms together with many of our clients. We have published various research papers evaluating stress testing and advising on unique mechanisms. This experience will be a key asset in our involvement with the ARDC.
Engaging with Governance: We recognize that robust governance plays a viable role in the growth and longevity of blockchain ecosystems. Our extensive experience collaborating with various DAOs gives us a profound understanding of effective governance practices. We have cultivated significant expertise in engaging with delegates and governance bodies, an experience we are eager to apply to enhance the ARDC’s governance framework.
Scope of Services & Applicable Fees [Detailed breakdown of fees including pricing model for the 6-month term] [Applicable to all except DAOAdvocate] [Must not exceed applicable cap]. Please provide a detailed breakdown of the scope of services through which you will be contributing. Include the pricing model implemented & a description of expected hours + hourly rate (if applicable) & manpower dedicated to the ARDC.
Chaos Labs is taking a community-first approach to pricing our services to affirm our commitment to the success of the ARDC and the Arbitrum DAO. We aim to ensure that the Arbitrum community benefits from top-tier services at the fairest possible price, reinforcing our dedication to transparency and genuine value.
- Specialized Task Force: In our effort to meet the specific needs and goals of the ARDC, we are assembling a dedicated task force, including a data scientist, data engineer, and data analyst, all of whom are fully committed to supporting the ARDC projects.
- Access to Chaos Labs Suite of Risk Products - For the ARDC’s purposes, the dedicated team will leverage the Chaos Labs simulation platform and extensive risk tooling to support the analysis and evaluation of proposals and identify and mitigate the economic risks inherent in proposed community initiatives.
- Expected Budget: We’re committed to providing services for $320,000 over the 6-month term.
This strategy highlights our belief in the importance of our services and our eagerness to build trust and foster collaboration within the Arbitrum community, especially during the foundational phase of the ARDC. We aim to ensure that the DAO receives unparalleled support and service, with costs that accurately reflect our genuine contributions towards its achievements.
Summary [Applicable to all]
In summary, please highlight your key qualifications and what you believe you can bring to ARDC. (400 words max)
Chaos Labs offers a unique blend of expertise in quantitative analysis, risk management, and DeFi protocol optimization, positioning us as a key contributor to the ARDC. Our qualifications stem from a strong foundation in risk management, economic security, mechanism design, and statistical modeling, which enables precise evaluation of proposals and a comprehensive understanding of risk, ensuring the Arbitrum ecosystem’s stability and secure growth. Our experience in developing security measures and optimizing protocols contributes to our ability to improve system efficiency and user engagement.
Chaos Labs is committed to fostering community engagement, believing in the power of collaboration and open dialogue to enhance governance and decision-making. We prioritize transparent communication and education to demystify complex technical and economic concepts for the broader community. This approach empowers stakeholders and supports informed participation in the ecosystem’s growth.
Our team’s dedication to continuous learning and adaptation ensures that our contributions remain relevant and impactful, addressing the evolving challenges and opportunities within the DeFi space. By leveraging our comprehensive skillset and proactive approach, Chaos Labs aims to support the ARDC’s objectives significantly, driving the development of a secure, efficient, and innovative Arbitrum ecosystem.