Chaos Labs, known as one of the important actors of risk management in the Aave protocol, announced that it will leave the ecosystem. This decision, which follows the high-level differences in the protocol since the beginning of the year, is seen as a development that may directly affect Aave’s operational structure and risk management.
High-level separations have attracted attention recently
A remarkable process has been going on in recent weeks, with the important contributors within Aave leaving one after the other. Previously, Aave Chan Initiative (ACI) and BGD Labs teams had similarly withdrawn from the protocol. These successive departures show that different views have come to the fore within the platform regarding its growth strategy and basic decision processes.
Chaos Labs took over the risk management of Aave starting from 2022. In the previous period, the total locked asset volume increased from 5 billion dollars to 26 billion dollars. The fact that no significant risky debt problem was encountered on the platform during this period is associated with Chaos Labs’ management approach.
Non-compliance in risk management and financial sustainability problem
However, in the statement made by Omer Goldberg, founder and CEO of Chaos Labs, it was stated that the current business structure is no longer sustainable. Goldberg stated that the company’s contribution no longer aligned with his own risk management values. Especially with the V4 update recently announced by Aave, the scope of activity and responsibilities of risk units have been expanded. These changes are evaluated by the company as operational complexity and expectations have increased, but the budget and resources have not grown to the same extent.
Goldberg emphasized that assuming new responsibilities requires the establishment of a completely new infrastructure and that this cannot be maintained efficiently under current conditions.
Additionally, economic sustainability stands out as an important problem. Chaos Labs stated that they constantly made losses even with the budget of 5 million dollars, and that the situation would not change even if this figure was increased by 1 million dollars.
Goldberg stated, “Despite the addition to the budget, we cannot go beyond continuing our risk management service by writing off monthly losses.”
On the other hand, it is stated that operational risk increases due to experienced teams leaving the ecosystem and the impact of these losses may be felt, especially when the platform is transitioning to a new version.
In this process for the Aave protocol, uncertainty continues about how the gaps in risk management will be filled and which teams will be entrusted with the new road map.
