Chaos Labs, a key figure in risk management within the Aave ecosystem for over three years, has announced its withdrawal from the platform. The decision marks a pivotal development for Aave, following recent organizational changes and a string of notable departures from the protocol.
Leadership changes and reasons for departure
Omer Goldberg, founder of Chaos Labs, emphasized that the decision was not taken lightly and stemmed from a fundamental divergence in risk management philosophies between the two parties. Chaos Labs has played a central role since 2022, overseeing the pricing of all debts on Aave and managing risks across both the V2 and V3 versions of the protocol.
Goldberg cited several driving factors behind the separation: lack of profitability, the departures of major contributors such as BGD Labs and Aave Chan Initiative, and a growing misalignment in vision with Aave Labs regarding risk management strategy. The anticipated launch and expansion of Aave V4—a move set to broaden the protocol’s scope—has only deepened these differences.
With the recent rollout of version V4, Aave has undergone a sweeping transformation. CEO of Aave Labs, Stani Kulechov, has underlined that the new core-periphery liquidity system is designed to open up the platform to broader markets. However, Chaos Labs remains cautious, warning that the transition also introduces significant short-term risks for the ecosystem.
Budget negotiations and governance proposals
During the transition, Goldberg argued that V3 would continue to require considerable support, and the overall workload was unlikely to decrease in the near future. He also revealed that Chaos Labs had incurred losses over the previous three years while serving in its risk management role.
Aave Labs proposed a $5 million budget increase aimed at retaining Chaos Labs’ involvement in the project. However, Chaos Labs calculated its annual requirements at $8 million, noting that this figure represents approximately 5.6 percent of the Aave protocol’s revenue. Importantly, additional operational and legal risks were not included in this calculation.
Goldberg maintained that, even if economic terms were adjusted, fundamental disagreements over how risk should be prioritized and managed within Aave would persist; as such, these differences could not be resolved solely through financial measures.
Among Aave Labs’ latest governance proposals were plans to restructure the platform as a DAO-affiliated subsidiary and direct protocol income straight to the DAO. Yet these offers failed to satisfy other contributing teams. Both Aave Chan Initiative and BGD Labs, seen as critical participants, declined to renew their contracts. Marc Zeller drew particular attention to Aave Labs’ control over the governance token supply as a point of concern.
Recently, Aave Labs announced community approval for a proposal that would provide $50 million in funding for its own operations. There is also an ongoing push to transfer intellectual property rights tied to platform revenue under the direct control of the DAO, intensifying broader discussions about governance and financial oversight within the protocol.
