Rapid hair loss

In addition to being toxic, spotted oleander caterpillars (Empyreuma affinis) are covered in tufts of hairs that look like they could deliver a painful sting.  Some related species do indeed have stinging (urticating) hairs.  Thus, it seemed safest to avoid touching these caterpillars.

A spotted oleander caterpillar (Empyreuma affinis) climbs up a wall to find a place to pupate.

Whether the hairs sting or not, one way that they are used by the caterpillars is in their cocoons.  As a caterpillar spins a loose silk cocoon around itself, its hairs fall out and become incorporated in the cocoon.

A spotted oleander caterpillar (Empyreuma affinis) in its cocoon of silk and hairs.

Once the caterpillar pupates, only a few hairs are left attached to the shed skin (which can be seen to the left of the pupa below).

The early pupa, before it has darkened.

The hairs in the cocoons do not seem to provide protection for the pupae, however.  While clearing away some old cocoons and searching for any intact pupae among them, I ended up touching quite a few hairs without getting stung.