I want to thank Chaos Labs for their work over the past few years. They have been a valuable partner to the Aave DAO, and their contributions have helped Aave grow and mature. V3 and V4 will continue to operate as normal and there’s no impact on the protocol.
I also want to address a few points to ensure the community has a clear view of what happened and the path forward.
We recently discussed a proposal with Chaos Labs that included several requests that we did not support. These included designating Chaos Labs as the sole risk provider for the protocol, making their vaults the exclusive default for Aave’s B2B deals, and formalizing an expanded price oracle partnership across all new deployments with a minimum TVL secured requirement.
Chainlink is and always has been the primary price oracle provider for Aave when available, and we were not prepared to formalize an alternative arrangement as a condition of the engagement. We believe the two-provider risk manager model makes Aave more resilient, and we were not interested in granting sole provider status or vault exclusivity. They determined the engagement did not meet their requirements without these terms, and we respect that decision.
We also discussed their desire to increase their budget and we were supportive of increasing their it by approximately 2x to accommodate the expanded scope of V4, which has been in development for over two years. We also suggested their budget could continue to grow as the work scaled further. That said, the DAO could have disagreed with this take and voted for a higher increase right away if it were proposed.
Regarding Aave V4, the architecture introduces isolated risk markets through Spokes, new liquidation logic, and governance-controlled parameters that give the DAO more granular control over how it manages risk across different markets and assets. We held multiple risk calls with Chaos Labs employees in attendance well before V4 went live, and the feedback we received during those sessions does not match the concerns expressed in their post.
The V3-to-V4 transition has no forced timeline and Aave V3 will continue to operate for as long as the market demands it. The rollout will run in parallel, with V4 going live only after the architecture is fully proven in production.
For the immediate future, Aave Labs will work closely with Llama Risk to ensure a smooth transition and uninterrupted risk coverage for the protocol. Llama Risk already serves as a risk contributor to the Aave DAO and has deep familiarity with the protocol’s architecture and parameters. We support Llama Risk increasing their budget to accommodate this additional workload and expand their team as needed. Aave Labs will also contribute engineering and analytical resources wherever necessary to support this transition.
This transition also leaves the door open for other risk service providers to join the DAO. Aave has always benefited from a diversity of contributors, and we welcome new teams who want to build on and secure the protocol.
We have managed service provider transitions before, and we are fully prepared to manage this one. We remain focused on the protocol’s security and the V4 roadmap.