Key Takeaways
- After three years managing risk for Aave, Chaos Labs has officially stepped away, pointing to financial constraints and strategic misalignment.
- According to the company, overseeing Aave’s V4 transition doubles operational demands without corresponding budget adjustments.
- Chaos Labs maintains it would have incurred financial losses even under a proposed $5M compensation package.
- Aave’s leadership claims Chaos Labs sought exclusive risk provider status and pushed for replacing Chainlink’s oracle infrastructure—both proposals were turned down.
- Despite the departure, Aave assures users that protocol operations remain unaffected, with LlamaRisk continuing risk oversight responsibilities.
Chaos Labs has officially concluded its partnership with Aave, stepping down from its position as the DeFi lending platform’s primary risk manager after three years of service. This departure follows recent exits by other key contributors including ACI and BGD Labs, raising questions about contributor dynamics within the protocol.
Omer Goldberg, who founded Chaos Labs, addressed the split publicly on X, emphasizing that the choice “was not made in haste.” He explained that while his team maintained constructive relationships with Aave DAO members, the arrangement had evolved in ways that conflicted with their vision for proper risk management practices.
Chaos holds a simple principle: we only put our name on work we fully believe in.
Principles matter when they cost you something.
Today it's costing us $5 million.
To the Aave community: thank you for the trust. It was a privilege đź‘» https://t.co/ovrJYMSufm
— Omer Goldberg (@omeragoldberg) April 6, 2026
Chaos Labs began its engagement with Aave in November 2022, providing risk oversight across the protocol’s various lending markets. Throughout this collaboration, Aave experienced remarkable expansion, with its total value locked climbing from approximately $5 billion to more than $26 billion—all without suffering significant bad debt incidents.
The upcoming V4 protocol upgrade emerged as a major point of contention, according to Goldberg. He explained that the new architecture significantly expands risk management responsibilities, creating a situation where teams must simultaneously maintain V3 operations while implementing V4 protocols.
“History suggests these transitions take months and even years,” Goldberg stated. “The workload during the transition doesn’t halve. It doubles.”
Financial sustainability proved to be another breaking point. Chaos Labs indicated that even with Aave’s proposed budget increase to $5 million annually, the engagement would result in net losses for the firm.
Liability and Regulatory Concerns
Goldberg also highlighted the precarious legal position of risk managers in decentralized finance. He pointed out the absence of clear regulatory standards defining a risk manager’s liability when protocol failures occur.
“If things work, the work is invisible. If things break, the blame is not,” he observed.
These concerns gained additional relevance following a March 12 incident where a user sustained a $50 million loss during a transaction on Aave’s platform. In response, Aave has rolled out an “Aave Shield” mechanism designed to restrict potentially dangerous trading activities.
Aave Leadership’s Perspective
Stani Kulechov, CEO of Aave Labs, presented an alternative narrative regarding the separation. According to Kulechov, Chaos Labs had submitted a proposal requesting exclusive status as Aave’s only risk provider, while also advocating for the replacement of Chainlink’s price feed infrastructure with its proprietary solution.
Aave’s governance rejected both conditions. Kulechov emphasized the protocol’s successful history with Chainlink and expressed commitment to maintaining its dual-layer risk framework that includes LlamaRisk as a complementary provider.
Kulechov further noted that Chaos Labs had been considering scaling back its risk consulting operations even before formal separation discussions concluded.
He reassured the community that the transition has caused no interruptions to Aave’s smart contract operations, asset onboarding processes, or blockchain integrations.
Moving forward, Aave will coordinate with LlamaRisk alongside its internal teams to ensure comprehensive risk management coverage across all protocol activities.
The split occurs during a period of substantial growth for Aave. In late February, the protocol achieved a landmark milestone by surpassing $1 trillion in total historical lending volume—an unprecedented achievement in the decentralized finance sector.
