Key Highlights
- Chaos Labs founder Omer Goldberg announced the firm’s departure from Aave.
- According to Goldberg, the decision follows discussions with Aave Labs.
- Other contributors, including BGD Labs and Aave Chan Initiative, have also recently stepped down.
Risk management firm Chaos Labs announced on Monday it will step down from its role as Aave’s primary risk partner after over three years of service, citing fundamental misalignment on risk strategy, increased operational burden from departing contributors, and unsustainable economics as the protocol prepares for the V4 upgrade.
In a detailed X post, Chaos Labs founder Omer Goldberg stated that since its association with Aave, the firm had priced every loan on the protocol and managed risk over all V2 and V3 markets and networks.
It further mentioned that, during this time, the firm had zero material bad debt while Aave increased its total value locked (TVL) from $5.2 billion to over $26 billion, facilitated more than $2.5 trillion in cumulative deposit volume, and processed over $2 billion in liquidations.
In addition, Chaos Labs developed key infrastructure, such as risk oracles and real-time parameter update systems, which helped Aave scale to over 250 markets across 19 blockchains.
What led to the departure?
Chaos Labs framed the exit as a strategic break rather than a sudden fallout. Goldberg even highlighted that the decision has been made after discussions with Aave Labs. He further stated three core issues that led to the departure:
- The exit of other prominent contributors increased the workload and operational risk.
- Aave V4 comes with a new architecture, smart contract codebase, and risk paradigm, expanding the scope, operational complexity, and legal burden on a design Chaos Labs said it would not have chosen.
- Chaos had run the Aave at negative margins for three years, and even with an increase of $1 million, the engagement would continue operating at a loss.
High-profile departures
Chaos Labs described itself as the last remaining technical contributor from the group that had operated Aave V3 through live market conditions over the past three years. Their exit marks the latest in a series of departures. The main team handling Aave V3, BGD Labs, announced its departure in February, concluding its engagement on April 1, 2026.
The Aave Chan Initiative (ACI) has also left so far amid governance tensions. These moves have raised questions about centralization around Aave Labs and the protocol’s direction as it transitions to V4.
These concerns were echoed in the forum reaction. One community member described the news as the most bearish development yet for Aave’s risk management infrastructure and argued there is no easy replacement for a provider with Chaos Labs’ tooling and operating knowledge.
However, Goldberg closed the chapter on a positive note and has also expressed pride in Aave’s reliability-driven success. He also wished the protocol well for the future. Regardless of several departures, lending and borrowing on Aave functioned uninterruptedly, with secured protocol’s smart contracts.
What comes next
Chaos Labs’ exit after three years of risk oversight marks a turning point for Aave. As Aave moves toward V4, the DAO will need to address how it fills critical risk and operational gaps to maintain the trust that built its dominant position.
Chaos Labs said it plans to pursue an orderly offboarding and will publish a separate proposal covering transition details, handoff scope, and continuity support for the DAO.
Also, Aave’s future will depend on how quickly the DAO can rebuild a robust risk infrastructure and attract experienced teams willing to operate at the scale and standards the protocol demands.
AAVE was trading at about $95.38 at the time of writing, up roughly 3.9% on the day, according to CoinMarketCap data.
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