Chaos Labs Leaves Aave: Risk Crisis

Chaos Labs’ Departure from the Aave Ecosystem

Chaos Labs announced its departure from the ecosystem after serving as the main risk provider for the Aave protocol for three years. The separation occurred due to budget disagreements and differences in risk management strategies. Chaos Labs founder Omer Goldberg stated that Aave Labs increased the budget to 5 million dollars but the incompatibility in risk management continued, saying, “This decision was not rushed.” Chaos played a key role in credit pricing and risk management in Aave V2 and V3 markets; during this process, Aave’s total value locked rose to 26 billion dollars.

Source: Omer Goldberg

Aave Risk Management Discussions and the Future

Aave Labs CEO Stani Kulechov stated that they rejected Chaos’s desire to be the sole risk provider and to disable LlamaRisk and Chainlink, as it would disrupt the two-tier risk model. Chaos’s departure did not affect the protocol, smart contracts, or integrations. Aave will continue the model by transitioning with LlamaRisk. The separation occurred amid risk discussions in the Aave community (like the 50 million dollar user loss in March) and additional burdens from the V4 transition; Aave reached 1 trillion dollars in cumulative lending volume in DeFi for the first time in February.

Source: LlamaRisk

AAVE Current Technical Outlook

AAVE price at 92.56 USD level, down % -2.40 in the last 24 hours, in downtrend. RSI 32.12 (Oversold), Supertrend bearish, EMA 20: 100.17 USD. Click for AAVE detailed analysis.

• Supports: S1 90.69 USD (strong, % -2.06), S2 66.23 USD (medium).
• Resistances: R1 101.11 USD (strong, % +9.19), R2 94.73 USD (strong).

Consider the risks of AAVE futures. Volatility may increase after Chaos’s departure.