Summary
Chaos Labs proposes to renew its engagement with Venus Protocol for a 24-month term, expanding on the foundational risk management work of the past 2 years and ushering in a more intelligent, responsive future for Venus. The cornerstone of this renewal is the continued rollout and integration of Chaos Labs’ Risk Oracle infrastructure, enabling automated, real-time updates to market risk parameters—a major advancement toward protocol adaptability and capital efficiency.
In parallel, Chaos Labs will continue to provide the community with rigorous simulation-based parameter optimization, real-time monitoring and alerting, incident response, and support for asset listings and isolated market launches, currently supporting over 160 assets across 20 isolated markets. Together, these services will ensure Venus remains not only safe, but agile, competitive, and sustainable as it scales.
Strategic Rationale
Over the past 24 months, Chaos Labs has served as Venus’ comprehensive risk engine, delivering end-to-end coverage across core protocol parameters, market onboarding, real-time monitoring, incident response, and simulation-based optimization. This wide-ranging support has become a critical layer of defense and decision-making infrastructure, safeguarding protocol health while enabling responsible growth.
Manual VIP-based parameter updates—though aligned with Venus’ governance-first philosophy—are inherently limited in pace and responsiveness. To address this, Chaos Labs designed and deployed the Risk Oracle architecture, a novel framework that brings real-time, simulation-informed parameter recommendations on-chain. Already live for borrow and supply caps, this system allows Venus to automatically adapt to current usage patterns and risk exposure, without compromising decentralization or safety.
The Risk Oracle is a paradigm shift: from reactive to proactive, from manual to autonomous. With bounded logic, on-chain validation, and secure execution via a Keeper, it ensures that key risk parameters reflect current market realities—not trailing conditions. This is especially critical in volatile environments, where hours can matter and capital efficiency must be finely balanced against systemic safety.
The proposed renewal will extend this infrastructure, allowing Venus to evolve into a self-regulating protocol—where parameters such as interest rates, liquidation thresholds, and collateral factors can be tuned dynamically through transparent, auditable, and data-driven automation. Paired with our continued support across simulations, monitoring, and onboarding, Chaos Labs ensures Venus remains not only one of the safest protocols in DeFi, but also one of the most agile and forward-looking.
Highlighted Products and Ongoing Work
Chaos Labs has served as Venus’ dedicated risk partner for the past 24 months. Over this period, we have delivered:
Simulation-Backed Parameter Optimization
- Provided hundreds of risk recommendations across core protocol parameters, including LTVs, interest rate models, reserve factors, liquidation incentives, and caps.
- Delivered 86 asset listing recommendations, offering detailed risk assessments to support informed onboarding decisions.
- Leveraged Chaos Labs’ proprietary simulation engine, running agent-based models and Monte Carlo simulations to model user behavior and assess protocol-level risk across various volatility scenarios.
- Introduced Extreme Value at Risk (VaR) analysis as a decision-making framework, improving risk transparency and governance context.
Notable Analyses and Proposals
Oracle Implementations
- Proposal: Increase robustness of feeds configuration.
- Configure BTC/USD Feed as Oracle Source for SolvBTC in the Venus Core Pool
Asset Listings and Deprecations
- USDD [OLD] Deprecation and USDD 2.0 Listing Recommendation
- Support ynBNBx as collateral on BNB Chain
- Proposal: List Threshold Network’s tBTC on Venus Core Pool
- Proposal: Listing PT-sUSDe (26 June) on Venus BNB Core Pool
Rapid Market Event Updates
- Chaos Labs - Update on Bybit Security Event and USDe Market Reaction
- Chaos Labs - ALPACA and rsETH Risk Update
- Chaos Labs - zkETH Risk Update
- FDUSD Depeg Response
New Market Deployments
Unique Venus Mechanisms
Venus Risk Monitoring Platform
- Deployed a real-time monitoring dashboard available to Venus contributors and the community.
- Enabled granular visibility into:
- Market utilization trends
- Wallet-level exposure and liquidation risk
- Historical and real-time protocol health metrics
- Supported contributor alerting with early warnings on volatility, abnormal usage, or collateral concentration risks.
Risk Oracle Implementation
- Completed internal development of the first Chaos Labs Risk Oracle for Venus.
- Designed to enable bounded, automated updates to borrow and supply caps—validated via a Keeper and executable trustlessly on-chain.
- Internally validated for robustness and security, with all components ready for deployment.
- Demonstrated potential for measurable improvements in protocol agility and safety, setting the stage for broader automation.
- Integration into the Venus protocol is planned for the near future, with deployment preparations actively underway to ensure a seamless launch.
Incident Response and Risk Mitigation
- Provided emergency risk assessments during episodes of ecosystem-wide volatility, including:
- Depegs and price spikes
- Sudden utilization surges
- Isolated liquidation events
- Delivered mitigation recommendations with scenario modeling and proposed on-chain changes to limit contagion.
Scope of Work
1. Expansion of Risk Oracle Automation
Chaos Labs proposes deepening the integration and utility of the Risk Oracle system as a foundation for autonomous, real-time risk parameterization. Building on the initial implementation, which will deliver bounded updates to borrow and supply caps, we will enhance the Oracle’s capabilities to support broader categories of dynamic risk adjustments.
Our goal is to enable the Venus protocol to respond to evolving market conditions in real time, governed by simulation-informed logic and executed within community-approved safeguards. This evolution supports a more adaptive protocol posture, where risk settings continuously align with usage patterns, volatility regimes, and system health, without awaiting manual intervention.
A newly developed public Risk Oracle Dashboard will accompany this effort, offering:
- Historical and live views of Oracle-driven parameter values
- Simulation context and rationale for updates
- Insights into downstream impact on utilization, capital efficiency, and liquidation risk
This framework paves the way for autonomous parameterization across multiple domains, with all changes transparently validated on-chain and surfaced to the community, enhancing Venus’ resilience, agility, and efficiency in a rapidly evolving DeFi landscape.
2. Simulation-Based Parameter Optimization
Chaos Labs will continue to run routine and on-demand simulations to evaluate optimal settings for:
- Collateral Factors
- Liquidation Incentives and Thresholds
- Supply and Borrow Caps
- Reserve Factors
- Interest Rate Curve Designs
Each recommendation includes detailed modeling of user behavior, Value at Risk under various tail events, and tradeoffs between protocol revenue, usage, and liquidation risk.
3. Monitoring, Alerting & Analytics
We will maintain and continue to improve the Venus Risk Monitoring Platform. Key features include:
- Real-time tracking of utilization, liquidity depth, asset correlation, and wallet concentration
- Alerts for threshold breaches or emerging risk vectors (e.g., large-position migrations, liquidation clustering)
- Metrics to support contributors and delegates in understanding protocol health
4. Incident Response and Emergency Triage
In the event of unforeseen market disruptions, Chaos Labs will:
- Rapidly assess risk impact through simulations and data forensics
- Recommend emergency parameter updates or freeze actions if necessary
- Coordinate with community members, developers, and signers during critical response windows
This real-time coverage has proven critical during prior market stress scenarios and will continue to be a core pillar of our support.
5. New Asset & Market Onboarding
As Venus continues to grow, Chaos Labs will provide full-spectrum onboarding risk analysis for:
- Newly listed collateral and borrowable assets
- Isolated market design and parameterization
- Strategic asset grouping and caps
- Governance and community-facing onboarding packages
Community Collaboration & Governance
We will continue to provide:
- Public updates covering simulations, Oracle output, risk alerts, and future priorities
- Governance forum engagement with context, rationale, and simulation analysis
- Direct communication with contributors and delegates to align risk priorities and respond to feedback
- Proposal authorship and support in drafting risk-related VIPs
Our commitment remains one of transparency, precision, and accessibility.
Engagement History
Original Engagement
Duration
July 20, 2023 - July 19, 2025
Original Pricing Agreement
- Annual Cost: $400,000 (25% discount off of list price)
- Billing Cycle: Quarterly
Expansion Context
Chaos Labs began its engagement with Venus by supporting a single deployment on BNB Chain, with a contractual option to expand to additional deployments at a cost of $10,000 per month ($120,000 annually) per chain.
Over time, Venus expanded the engagement beyond the original scope with the following additions:
Incremental Paid Deployments
- Arbitrum
- Ethereum
These deployments were invoiced and paid on a pro-rated basis in accordance with the commercial terms outlined in our agreement.
Incremental Unpaid Deployments
- Base
- ZKSync
- Unichain
These deployments were never contractually added, invoiced or paid, despite Venus having committed to commercial terms for expansion. In good faith and in the spirit of our partnership, Chaos Labs chose not to charge or backdate any fees for the significant work required to support these additional deployments.
Cost Summary Overview
| Scope | Annual Cost | Notes |
|---|---|---|
| Original Engagement (BNB Chain only) | $400,000 | Initial contract |
| Annual Run Rate inclusive of paid deployments (Arbitrum + Ethereum) | $640,000 | 2 additional deployments at $120K/year each; $240K/year total |
| Annual Run Rate inclusive of unpaid deployments (Base, Unichain, ZKSync) | $1,000,000 | 3 additional unpaid deployments valued at $120K/year each; $360K/year total |
Unbilled Contributions: Chaos Labs absorbed $360,000 annually in additional costs for the 3 unpaid deployments (Base, ZKSync, Unichain) — a meaningful commitment made without compensation to date.
Next Steps
As we plan for the next phase of our collaboration, it is critical that pricing reflects the true scope of the services being provided. We look forward to realigning commercial terms to ensure ongoing partnership sustainability and continued high-quality support across all active deployments.
Based on recent feedback from the Venus team, Chaos Labs will be narrowing the scope of support to focus exclusively on the BNB Chain deployment. This strategic reduction allows Chaos Labs to dedicate concentrated resources toward optimizing and securing the core Venus deployment on BNB, while pausing support for additional deployments (e.g., Arbitrum, Ethereum, Base, etc.) at this time.
Renewal Commercial Terms
- Duration: 24-month engagement
- July 20th, 2025 to July 19th, 2027
- Annual Fee: $400,000 USD
- Paid quarterly upfront ($100,000 USD per quarter)
- Paid via token (Binance Peg USDC); sent to a Chaos Labs-controlled wallet
- 0xb98D807cDD58a35d2Fca300bEBC06ac39A7CE038
- Scope:
- BNB - base deployment package
| Scope | Annual List Price | Discount % | Annual Cost |
|---|---|---|---|
| BNB Chain | $1,000,000 | 60% | $400,000 |
- Not In Scope
- Coverage for the following historical deployment are not included in this renewal:
- Arbitrum
- Ethereum
- Base
- ZKsync
- Unichain
- Coverage for additional deployments beyond BNB chain will be billed at $120,000 (40% discount) USD annually and will be pro-rated co-term to this engagement.
- Coverage for the following historical deployment are not included in this renewal:
Performance-Based Compensation
To further align incentives and support long-term growth, a supplementary performance-based compensation structure be introduced based on the TVL (Total Value Locked) across all Venus Protocol deployments, not limited to only BNB Chain.
This supplementary payment structure will be reviewed quarterly. The amount invoiced will be determined by calculating the average TVL over the prior quarter across all Venus-supported chains.
TVL data will be sourced according to DeFiLlama, using the publicly accessible Venus dashboard (https://defillama.com/protocol/venus) as the single source of truth for cross-chain TVL tracking.
Bonus tiers are set as follows:
| Average Quarterly TVL (Across All Chains) | Quarterly Bonus Payment |
|---|---|
| ≥ $2B | $25,000 |
| ≥ $3B | $50,000 |
| ≥ $5B | $100,000 |
Terms and Conditions
This engagement will be governed by the Chaos Labs standard terms and conditions as seen here:
Looking Ahead
With this renewal, Venus solidifies its position as one of the first lending protocols to bring autonomous risk management to production. The expanded use of Chaos Labs’ Risk Oracle will allow Venus to adjust parameters with precision and agility, supporting growth, defending against shocks, and optimizing user experience.
Paired with ongoing simulation work, monitoring systems, and risk advisory, Chaos Labs’ engagement ensures Venus remains among the most secure, data-driven protocols in DeFi.
We are excited to continue this journey with the Venus community as partners in building a more robust, scalable, and adaptive financial system on-chain.