Chaos Labs Ends Partnership with Aave Over Risk Management Disputes
- Chaos Labs served as Aave’s main risk service provider for three years, managing risk and pricing loans since November.
- The decision to part ways was attributed to budget disputes and differing views on risk management, despite an offer to increase their budget to $5 million.
- Aave’s total value locked increased fivefold to $26 billion during Chaos’ tenure, highlighting their significant role in the ecosystem.
- Following a major loss of $50 million by a user in March, Aave announced plans for an “Aave Shield” feature to protect against high-risk trades.
- Aave Labs will now collaborate with LlamaRisk to ensure continuity in risk management as it transitions towards Aave V4.
Chaos Labs’ departure reflects ongoing internal conflicts regarding funding and control within the DAO structure of Aave, particularly after achieving over $1 trillion in cumulative lending volume.
This split underscores the complexities of managing decentralized finance risks, especially as both parties navigate significant operational challenges during protocol upgrades. (Source)
