Aave Core Risk Manager Chaos Labs Exits, Raising Governance and Operational Stability Concerns

Aave is a major DeFi lending protocol, and Chaos Labs had set parameters and priced every loan across its V2 and V3 markets since November 2022, with no major bad debt recorded during that period. Over more than three years of collaboration, Aave’s TVL increased from $5.2 billion to more than $26 billion, while cumulative deposits exceeded $2.5 trillion. The handover of risk management responsibilities therefore has direct implications for the security of user funds.

Chaos Labs announced its departure on April 6, citing fundamental disagreements over Aave V4’s architecture and approach to risk. Its original budget was $3 million, but supporting both V3 and V4 was estimated to require $8 million, while Aave Labs backed only $5 million. Chaos Labs proposed a 30-day transition on April 8, with LlamaRisk taking over. It is the latest core contributor to leave after BGD Labs and ACI.