Chaos Labs - Monthly Community Update

November 2023


This update highlights the past month’s activities and proposals.


  • KNC Exploit - Following the exploit on the KyberSwap DEX on November 22nd, we conducted a comprehensive analysis to assess its impact on Aave. In our evaluation, we emphasized that the incident did not introduce significant risk to the protocol. This was primarily due to the conservative parameters set for the asset and its limited usage on the protocol. As a precautionary measure to safeguard the protocol against unforeseen developments, we recommended a temporary freeze. However, as the price of KNC stabilized and considering its conservative parameter settings, we ultimately decided not to proceed with an AIP.
  • Grace Sentinel Authorization - following the security threat reported on November 4th, which led to the pausing of several V2 and V3 pools by the Aave Guardian, we collaborated with other community members on the plan of reactivating the affected pools. Together with Gauntlet, we provided final recommendations to the Aave Guardian on activating the Liquidations Grace Sentinel, a newly developed mechanism with the primary objective of safeguarding users who were unable to refill or repay their positions during the pause, protecting them from liquidation upon the resumption of normal protocol operations.
  • We supported the recent launch of Gnosis Chain with initial parameter recommendations and its integration into our Risk Portal post-launch. As usage on the deployment continues to grow we are prepared to support with parameter optimization, supply and borrow cap recommendations, and new asset listings.

  • Chaos’ renewal proposal has passed with unanimous support. We are truly grateful for this vote of confidence and are deeply committed to our ongoing collaboration with the community. We look forward to continuing our hard work in securing Aave and maintaining the protocol’s position as market leader.

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What’s Next

In the coming months, the Chaos team will continue its focus on the following areas:

  • GHO
  • Continuation of the V2 risk parameter updates to gradually reduce capital efficiency across V2 collateral assets.
  • Continuous optimization of risk parameters on all V3 deployments.
  • Analysis and parameter recommendations for new assets and markets.
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