TLDR
- Chaos Labs has announced its departure from Aave following nearly three years serving as a primary risk management provider.
- The company cited Aave V4’s requirements for new infrastructure, modeling systems, and simultaneous V3/V4 support.
- According to Chaos Labs, the Aave engagement operated at a financial loss throughout the entire three-year period.
- Aave Labs reportedly proposed a $5 million allocation, falling short of Chaos Labs’ projected $8 million requirement.
- This departure follows previous exits by BGD Labs and Aave Chan Initiative from the protocol’s contributor base.
Chaos Labs has declared its intention to step down from its position as Aave’s primary risk management provider following a tenure spanning nearly three years. The company attributes the separation to disagreements surrounding V4 project scope, resource allocation, and financial compensation. This development intensifies challenges facing Aave during its extended V4 deployment timeline.
Risk management firm points to misalignment between protocol evolution and engagement structure
According to Chaos Labs, the firm has been responsible for pricing every lending position initiated on Aave starting in November 2022. The company also highlighted its management of risk parameters throughout all Aave V2 and V3 market deployments. The organization emphasized that this oversight resulted in zero significant bad debt accumulation throughout its engagement period.
Company founder Omer Goldberg clarified that the withdrawal decision wasn’t reached hastily. He explained that the existing arrangement no longer aligned with the firm’s philosophy regarding proper risk oversight methodology. Goldberg stressed that the situation extended well beyond straightforward compensation negotiations.
Aave DAO Loses Another Key Contributor: Chaos Labs Exits Risk Management
Chaos Labs announced on the Aave governance forum that it will terminate its risk management engagement with Aave, citing misalignment in risk management approach; it also pointed to contributor departures,… pic.twitter.com/DSAq8DrXk6
— Wu Blockchain (@WuBlockchain) April 6, 2026
The firm emphasized that Aave V4 fundamentally transforms the nature of risk management responsibilities. Chaos Labs characterized V4 as essentially a fresh lending platform featuring substantially different structural design. This architectural evolution would introduce additional legal, technical, and operational obligations.
Additionally, Chaos Labs noted that the V4 transition wouldn’t diminish existing V3 responsibilities. Rather, both protocol versions would demand concurrent oversight throughout an extended migration timeline. Goldberg observed, “Historical precedent indicates these transitions span months or potentially years.”
Financial considerations and resource requirements intensified separation
Chaos Labs revealed that managing the Aave engagement resulted in financial losses throughout the entire three-year period. The company disclosed its 2025 operational budget stood at approximately $3 million. The firm further stated that Aave Labs extended a $5 million offer aimed at retaining the team.
Goldberg maintained this proposed allocation remained insufficient for the broadened responsibilities. Chaos Labs calculated that maintaining oversight across both V3 and V4 deployments would necessitate a minimum $8 million budget. Goldberg noted this estimate still omitted certain legal and operational risk factors.
The company drew comparisons between its proposed budget and Aave’s publicly reported 2025 financial performance. Chaos Labs referenced Aave’s $142 million revenue generation during the previous year. The firm calculated its budget request represented roughly 2 percent of total protocol revenue.
Goldberg contended this percentage fell significantly below industry-standard allocations for risk management and compliance infrastructure. He referenced traditional banking institutions typically dedicating between 6 percent and 10 percent of resources toward these functions. Nevertheless, he clarified that budget discussions represented only one component of the broader disagreement.
Departure reflects wider governance challenges surrounding V4 transition
Chaos Labs connected its withdrawal to recent contributor departures affecting the Aave ecosystem. The firm noted BGD Labs and Aave Chan Initiative had previously announced their intentions to discontinue involvement. Chaos Labs positioned itself as the final remaining technical contributor from the original V3 development cohort.
This distinction carries significance given Aave’s current developmental trajectory. Chaos Labs highlighted that successful V4 implementation would demand entirely new infrastructure components and simulation frameworks. The company also noted the updated codebase lacks extensive real-world deployment validation.
Aave creator Stani Kulechov presented an alternative perspective on the deployment strategy. He characterized the V4 launch as deliberately measured and extended to prioritize security considerations. Kulechov stated, “Aave V3 maintains complete functionality. Users face no mandatory migration requirements.”
This conflict emerges against the backdrop of ongoing governance discussions throughout the Aave community. Kulechov recently introduced a proposal seeking to restructure Aave Labs as a DAO-controlled entity. This initiative followed community backlash regarding Aave Labs’ prior decision to reroute DAO revenue streams toward a corporate treasury account.
