Risk management provider Chaos Labs has ended its three-year partnership with the Aave lending protocol. The split, stated by Chaos founder Omer Goldberg, followed a budget dispute and fundamental disagreements on risk strategy, despite a $5 million retention offer. Aave Labs CEO Stani Kulechov said the departure was amicable but claimed Chaos sought to become the sole risk provider, a proposal Aave rejected.
Chaos Labs has parted ways with the Aave ecosystem after three years as its main risk service provider. The firm cited a budget dispute and philosophical disagreements over risk management as key reasons for the exit.
In a post, Chaos founder Omer Goldberg said, “We are leaving because the engagement no longer reflects how we believe risk should be managed.” He noted the firm walked away from a $5 million engagement after Aave Labs supported increasing its budget to that amount.
Aave Labs CEO Stani Kulechov offered a different perspective on the split. He said Chaos pitched becoming the sole risk provider, which would force out partner LlamaRisk.
Kulechov added Chaos wanted Aave to use its price oracles instead of Chainlink‘s, a change Aave was unwilling to make. The protocol will now work closely with LlamaRisk to ensure a smooth transition.
Chaos played a key role in Aave‘s infrastructure, managing risk during a period where its total value locked grew fivefold to $26 billion. The departure occurs amid internal debates over funding control between Aave Labs and its DAO.
Risk management became a major community topic after a user lost $50 million in a trade on March 12. Despite the internal issues, Aave recently crossed $1 trillion in cumulative lending volume.
