Chaos Labs has terminated its risk management agreement with Aave ($AAVE) after three years, citing unsustainable economies and disagreements over how V4 should be managed.
The departure marks the latest in a series of exits from the largest Decentralized Finance (DeFi) lending protocol, which holds a total value of more than $24 billion.
Chaos Labs leaves Aave after three years of risk management
Chaos Labs founder Omer Goldberg outlined three factors behind the decision.
- Key V3 employees had already left, doubling the workload
- Aave V4 introduced an entirely new architecture that expanded operational and legal burdens.
- Despite a proposed budget of $5 million, the company said it would still operate at a loss.
“Engagement no longer reflects how we believe risk should be managed,” Goldberg explains.
Goldberg compared Aave’s risk spend to banking benchmarks. He noted that Aave generated $142 million in revenue by 2025.
The company’s $3 million budget represented roughly 2% of that figure, well below the 6% to 10% that banks typically spend on compliance and risk.
Aave responds and LlamaRisk intervenes
Aave founder Stani Kulechov acknowledged the departure, but pushed back parts of the story.
He revealed that Chaos Labs had tried to become the sole risk manager and replace Chainlink’s pricing oracles with its own product on new deployments.
We respect Chaos Labs’ decision to step down as one of the two risk managers for the Aave DAO.
We would like 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 supplier lock-in.
DeFi risk management firm LlamaRisk, which partners with Aave, in addition to other major protocols such as Curve and Ethena, promised full operational continuity. The company said it would present a detailed transition proposal within a 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 by providing risk frameworks, parameterization, and quantitative models that underlie all Aave implementations in 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 more than $24 billion, while leadership focused discussions on $10 million in V4 deposits.
$AAVE was trading around $92 at the time of writing, down almost 4% on the day. The token is facing continued selling pressure due to governance tensions and contributor departures, weighing on market sentiment.