Chaos Labs is building the risk management framework for Ethereal, a high-throughput perp DEX appchain settling on Arbitrum.
Ethereal combines sub-20 millisecond latency and capacity for 1M orders per second with onchain settlement and custody, delivering a CEX-level experience for users. Backed by Chaos Labs’ track record securing leading perps protocols such as GMX and Jupiter Exchange, this collaboration will support Ethereal with the risk infrastructure needed to scale.
Risk management for perps and USDe
Chaos Labs will deliver a comprehensive suite of risk services to secure Ethereal’s perps markets and integrated USDe ecosystem. Our approach combines mechanism design, parameter calibration, and large-scale simulation to ensure the system is both resilient and capital-efficient from launch.
- Mechanism design review – in-depth analysis of Ethereal’s perps architecture, including funding rate calculations, orderbook dynamics, margin models, liquidation logic, and incentive structure.
- Risk parameter optimization – data-driven calibration of funding curves, risk limits, and reserve sizing to balance capital efficiency with safety. Parameters are tested against market volatility and liquidity scenarios to validate robustness under stress.
- Stress testing and scenario modeling – Monte Carlo and agent-based simulations that model tail events, liquidity shocks, and cascading liquidations. By replicating extreme scenarios such as sudden drawdowns or funding spikes, we can anticipate risks and design proactive mitigation strategies.
- Transparent reporting – dashboards and periodic updates that surface key data, parameter trade-offs, and recommendations. This provides the Ethereal community with the visibility needed to make informed governance decisions.
These services go beyond static parameter setting. By combining scenario-based stress testing with real-world simulations, Chaos Labs equips Ethereal with risk infrastructure that adapts to changing markets, ensuring the protocol can operate at scale without compromising resilience.
Built around USDe
Ethereal is positioned as the all-in-one USDe app, designed in close partnership with Ethena to unlock new trading and yield opportunities.
- Approved by the Ethena Risk Committee as the only onchain venue for basis trade flows
- USDe as margin to deliver best in class rewards & onchain liquidity
- Delivering a single venue where users can trade perps, manage exposure, and capture yield with USDe at the center
By combining CEX-speed perps with native USDe integration, Ethereal creates a new design space for scalable, capital-efficient onchain trading.