- Chaos Labs has ceased its risk management services for Aave due to budget constraints and strategic disagreements regarding V4’s implementation.
- LlamaRisk has committed to ensuring a seamless transition and will present a detailed plan shortly.
- Concerns over governance and core contributor departures are impacting AAVE’s market performance, with the token trading near $92.
Chaos Labs has concluded its three-year engagement as a risk management provider for Aave, citing economic unsustainability and divergent views on the strategic direction for Aave V4. This decision represents the latest in a series of core contributor departures from the leading decentralized finance (DeFi) lending protocol, which currently manages over $24 billion in total value locked.
Chaos Labs Ceases Aave Risk Management Services
Omer Goldberg, founder of Chaos Labs, articulated three primary reasons for the withdrawal:
- The departure of key V3 contributors significantly increased the team’s workload.
- The introduction of a new architecture for Aave V4 amplified operational and legal responsibilities.
- Even with a proposed budget of $5 million, the firm projected it would still incur losses.
“The engagement no longer reflects how we believe risk should be managed,” Goldberg explained.
Goldberg drew a comparison between Aave’s risk expenditure and industry banking standards. He highlighted that Aave generated approximately $142 million in revenue during 2025. The firm’s $3 million budget equated to roughly 2% of this revenue, falling short of the 6% to 10% typically allocated by banks for compliance and risk management functions.
Aave’s Response and LlamaRisk’s Continuity Plan
Stani Kulechov, founder of Aave, acknowledged Chaos Labs’ departure but contested certain aspects of their stated reasons. He disclosed that Chaos Labs had proposed becoming the exclusive risk manager and sought to replace Chainlink price oracles with its proprietary solution for new deployments.
We respect the decision of Chaos Labs to step down as one of the two risk managers for the Aave DAO. We want to thank Chaos Labs for their work over the years. They have been a valuable partner to the Aave DAO, and their contributions have helped Aave grow and mature.
Aave Labs reportedly declined both proposals to mitigate vendor lock-in risks.
LlamaRisk, a DeFi risk management firm already collaborating with Aave and other significant protocols like Curve and Ethena, has affirmed its commitment to full operational continuity. The firm indicated it would present a comprehensive transition proposal within the upcoming week.
We acknowledge @ChaosLabs’ sudden announcement to step down from their @Aave risk mandate. LlamaRisk has served the Aave ecosystem for the past two years, delivering risk frameworks, parametrization, and quantitative models underpinning all Aave deployments across V3, V4, and…
In parallel, analyst Duo Nine raised questions regarding Aave’s strategic focus, noting that V3 still commands over $24 billion in value while discussions appear centered on $10 million in V4 deposits.
The AAVE token was trading near $92 at the time of this report, marking a decline of nearly 4% over the past 24 hours. The token is experiencing ongoing selling pressure attributed to governance-related tensions and the departure of key contributors, which is negatively affecting market sentiment.
Source: : beincrypto.com