Chaos Labs, one of Aave’s key risk managers, is leaving the DeFi lending giant’s ecosystem, marking the latest in a string of high-profile contributor exits that have reshaped the protocol’s core operating team in recent months.
The departure follows earlier exits from major contributors like ACI (Aave Chan Initiative) and BGD Labs, signaling growing internal friction over the protocol’s direction.
Since 2022, Chaos Labs has overseen risk across Aave’s markets, helping the protocol grow from roughly $5 billion to more than $26 billion in total value locked, while maintaining “zero material bad debt.” But despite that track record, the firm says it can no longer continue under current conditions.
“The engagement no longer reflects how we believe risk should be managed,” said Omer Goldberg, CEO of Chaos Labs, in a post on X, pointing to a “fundamental misalignment” with Aave’s evolving strategy.
A key sticking point is Aave’s V4 upgrade, which introduces a new architecture and significantly expands the scope of risk management. Chaos argues this shift increases both operational complexity and responsibility, without a matching increase in resources or alignment.
“Taking on something new responsibly requires new infrastructure… and the full operational burden of going from zero to one again,” Goldberg wrote.
The firm also flagged economics as unsustainable. Even with a proposed $5 million budget, Chaos said it has been operating at a loss and would continue to do so. “Even with an increase of $1m, we’d still be operating Aave’s risk with negative margins,” Goldberg said.
At the same time, Chaos warned that the loss of experienced contributors is raising operational risk, especially as Aave transitions between versions. “Continuity of brand is not the same thing as continuity of system,” Goldberg wrote.
For Aave, the departure leaves open questions around how risk will be managed through its next phase of growth.
In a response posted on X, Aave Labs founder Stani Kulechov said the protocol would continue operating without disruption and emphasized that Chaos Labs was one of two risk providers, alongside LlamaRisk.
“We respect the decision of Chaos Labs… and want to thank [them] for their work over the years,” Kulechov wrote, adding that Aave will work with LlamaRisk and internal teams to ensure “uninterrupted risk coverage.”
(UPDATE, APRIL 6, 18:41 UTC): Adds Stani Kulechov’s response to Chaos Labs news.
Read more: Aave governance rift deepens as major governance group exits $26 billion DeFi protocol
