Chaos Labs Risk Management Proposal

Summary Chaos Labs proposes to enter into a risk management partnership with the Renzo community. This proposal includes:

• Developing bespoke risk methodologies designed around Renzo’s unique strategic positioning unlocking safe, sustainable growth for the protocol.
• Building a comprehensive risk management portal, empowering Chaos Labs and the broader community to identify and diagnose risks in advance.
• Creating a Renzo specific AVS risk framework, designed to address slashing, solvency and liquidity risks that arise from validating additional modules, specifically in relation to the incremental yield provided.
• Ongoing Risk Assessments covering all risk-relevant aspects of the Renzo protocol and its LRT tokens.
• The integration of Chaos Labs’ recently launched Risk Oracles.

Introduction Chaos Labs is a market leader in risk management and optimization solutions explicitly designed for DeFi protocols. Our strategies are framed to safeguard protocol assets against manifold threats such as market volatility, black swan events, liquidity raids, and diverse instances of market manipulation. We meticulously craft strategies to ensure the resilient preservation of protocol assets, even under turbulent market conditions. Our methodology is predicated on a comprehensive approach aimed at fortifying protocols against systemic risks, accomplished through dynamic and contextually responsive risk parameter recommendations. We emphasize the constant monitoring of positions and liquidity to optimize the performance of our protocols amidst market fluctuations.

Chaos Labs proposes a strategic collaboration with Renzo to create the frameworks necessary to scale and grow the Renzo restaking network in a secure, scalable, and robust manner. Chaos Labs will treat Renzo as a flagship customer, dedicating ample resources to this engagement. As a significant restaking protocol, Renzo and Chaos Labs have the opportunity to collaborate and firmly establish themselves as market leaders in Retaking Financial Risk, Economic Security, and Optimization.

This proposal includes all services for Eigenlayer, Symbiotic, Karak, and restaking protocols that will follow similar patterns to those. Wherever “Eigenlayer” and “AVS” are used throughout this proposal it is meant to include the above protocols and their respective secured services.

Value Proposition By partnering with Chaos Labs, Renzo will gain access to cutting-edge research and technology that will enhance the security and scalability of its restaking network. Chaos Labs will provide expertise and resources to help Renzo achieve its goals, positioning both organizations as leaders in the industry.

What the Renzo Community Will Receive

1. AVS Selection and Allocation Parameter Platform: A data-driven platform providing recommendations on AVS selection and optimal allocation parameters, enhancing efficiency and security.
2. Staked Token Recommendations and Reward Token Management - We will develop a risk framework and provide ongoing recommendations for including tokens in staking and managing AVS reward tokens.
3. Risk and Observability Analytics Platform: This comprehensive platform offers deep insights into the operational and financial risks associated with restaking. It will help Renzo monitor and manage risk effectively.
4. Risk Oracle Integrations: Integration with risk oracles to ensure real-time, reliable risk assessment and mitigation.

Why This is Good for the Renzo Community

• Enhanced Security: Implementing research-driven methodologies will bolster the security framework of Renzo’s restaking network.
• Scalability: The collaboration will create scalable solutions, enabling Renzo to grow without compromising performance or security.
• Market Leadership: By leveraging Chaos Labs’ expertise and resources, Renzo will strengthen its position as a market leader in economic security and optimization.
• Resource Allocation: Chaos Labs will treat Renzo as a flagship customer, ensuring that significant resources and attention are dedicated to this partnership.

Scope of Work Our collaboration will focus on the development of research-driven methodologies, which will lay the foundation for a software-driven platform offering the following critical functions for the Renzo community:

1. AVS Risk Framework
2. LRT Risk Framework
3. Parameter Recommendations Platform
4. Risk and Observability Analytics Platform
5. Risk Oracle Integrations

Together, these platforms will provide Renzo with the tools to operate a secure, scalable, and efficient restaking network, setting the stage for long-term success and industry leadership.

Proposed Scope of Ongoing Risk Management Following the establishment of the AVS Risk Framework and Token Risk Framework, Chaos Labs will provide continuous risk management services, which include:

• Evaluating the risk of new AVSs seeking allocation
• Proposing allocation amounts for new AVSs
• Conducting ongoing risk evaluations of AVSs and reallocation recommendations
• Performing ongoing risk assessments for staking tokens
• Conducting ongoing risk assessments of reward token management

Pricing Chaos Labs proposes an 18 month engagement at $480K in USDC per year for this full suite of risk management solutions discussed above.

The compensation should be made as quarterly payments of $120K per quarter, paid at the beginning of each quarter.

For the first quarter, we’re asking for 2,600,000 REZ