Chaos Labs has terminated its risk management engagement with Aave ($AAVE) after three years, citing unsustainable economics and disagreements over how V4 should be managed.
The departure marks the latest in a string of core contributor exits from Decentralized Finance’s (DeFi) largest lending protocol, which holds over $24 billion in total value locked.
Chaos Labs Walks Away From Aave After 3 Years of Risk Management
Chaos Labs founder Omer Goldberg outlined three factors behind the decision.
- Key V3 contributors had already departed, doubling the workload
- Aave V4 introduced an entirely new architecture that expanded operational and legal burdens.
- Despite a proposed $5 million budget, the firm said it would still operate at a loss.
“The engagement no longer reflects how we believe risk should be managed,” Goldberg explained.
Goldberg compared Aave’s risk spending to banking benchmarks. He noted Aave generated $142 million in revenue in 2025.
The firm’s $3 million budget represented roughly 2% of that figure, well below the 6% to 10% banks typically allocate to compliance and risk.
Aave Responds and LlamaRisk Steps In
Aave founder Stani Kulechov acknowledged the departure but pushed back on parts of the narrative.
He revealed Chaos Labs had sought to become the sole risk manager and replace Chainlink price oracles with its own product across 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.
There is…
— Stani (@StaniKulechov) April 6, 2026
Aave Labs rejected both proposals to avoid vendor lock-in.
DeFi risk management firm LlamaRisk, which works with Aave, among other major protocols like Curve and Ethena, pledged full operational continuity. The firm said it would present a detailed transition proposal within the 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… https://t.co/AOGRH7pblu
— LlamaRisk (@LlamaRisk) April 6, 2026
Meanwhile, analyst Duo Nine questioned Aave’s priorities, pointing out that V3 still holds over $24 billion while leadership focused discussions on $10 million in V4 deposits.
$AAVE traded near $92 at the time of writing, down by almost 4% on the day. The token faces sustained selling pressure amid governance tensions and contributor departures, weighing on market sentiment.
