Chaos Labs Wanted to Replace Chainlink on Aave: Why Stani Kulechov Said No

Chaos Labs, a prominent player in the decentralized finance (DeFi) space, has recently announced its departure from its risk management engagement with Aave, the largest lending protocol in the DeFi ecosystem, which currently holds over $24 billion in total value locked. This exit follows a series of high-profile contributions leaving the platform, raising concerns about the stability of Aave's core operations.

The decision to terminate the partnership after three years was made due to significant disagreements over the management of Aave's V4 architecture and unsustainable economic conditions. Chaos Labs founder Omer Goldberg outlined three primary factors driving the decision. Firstly, the departure of key contributors from Aave's V3 version had already doubled the workload for Chaos Labs, putting immense pressure on their team. Secondly, the introduction of Aave V4 brought about an entirely new architecture that increased operational and legal burdens, making it challenging to manage effectively. Finally, despite a proposed $5 million budget, Chaos Labs calculated that it would still operate at a loss, which was unsustainable in the long run.

Goldberg emphasized that the engagement no longer aligned with Chaos Labs' vision of how risk should be managed. He compared Aave's risk spending to traditional banking benchmarks, noting that Aave generated $142 million in revenue in 2025. However, the firm allocated only $3 million for risk management, representing roughly 2% of its revenue. This figure was significantly lower than the 6% to 10% that banks typically allocate to compliance and risk, highlighting potential gaps in Aave's risk management strategy.

Aave founder Stani Kulechov acknowledged the departure of Chaos Labs but disputed parts of the narrative. He revealed that Chaos Labs had sought to become the sole risk manager for the Aave Decentralized Autonomous Organization (DAO) and replace Chainlink's price oracles with its own product across new deployments. Kulechov expressed gratitude for Chaos Labs' contributions over the years but rejected their proposals to avoid vendor lock-in, ensuring that Aave remains agnostic in its risk management choices.

In response to the exit, DeFi risk management firm LlamaRisk, which already works with Aave alongside other major protocols like Curve and Ethena, pledged full operational continuity. LlamaRisk assured that it would present a detailed transition plan to ensure a smooth handover and maintain the stability of Aave's risk management operations.

This latest development in the DeFi landscape underscores the challenges faced by major platforms like Aave in retaining core contributors and managing their risk strategies effectively. As Aave continues to navigate these complexities, the departure of Chaos Labs serves as a reminder of the need for robust risk management frameworks and sustainable economic models to ensure long-term success in the rapidly evolving DeFi ecosystem.