Overview
- Chaos Labs, which priced every Aave loan since November 2022, disclosed Monday it will terminate its mandate after rejecting a $5 million renewal it said would still run the work at a loss.
- Aave, a major decentralized lending protocol, said operations continue and that LlamaRisk plus Aave Labs staff will expand coverage to keep risk monitoring and parameter updates running.
- The split centers on Aave’s new V4 architecture, which Chaos says requires fresh tooling and models while V3 remains active, doubling day‑to‑day work without a matching budget.
- Recent strain includes a March CAPO pricing error tied to Chaos tooling that triggered about $26–27 million in erroneous liquidations with no bad debt, sharpening questions over who is liable when off‑chain risk systems misfire.
- The departure follows earlier exits by ACI and BGD Labs, and AAVE fell more than 6% Tuesday to near a two‑year low as traders weighed a handover that comes with a risk budget Chaos estimated should be about $8 million a year versus roughly $5 million on offer.