Hassan Maishera
On Monday, Aave Labs announced via a blog post that Chaos Labs has stepped down as one of the two risk managers for the Aave DAO. There is no disruption to the Aave Protocol, its smart contracts, asset listings, or network deployments, and the team will work closely with Chaos Labs during the offboarding process.
Aave operates with a two-layer economic risk model that has been managed by Chaos Labs and LlamaRisk. While this model does create tension between risk managers from time to time, Aave DAO believe it has been valuable in safeguarding Aave.
Aave DAO strongly supports maintaining a two-layer approach and will continue supporting this model, alongside an additional technical risk layer managed by Aave Labs.
Over the past weeks, Aave DAO held discussions with the Chaos team regarding next steps, as Chaos was exploring winding down its risk consultancy services business (and had already begun winding down some agreements with other protocols).
Aave DAO added that they were generally supportive of a 2× increase in their risk management payment to $5M, but not supportive of $8M without a separate addendum at a later stage if the workload proved higher than anticipated.
However, Aave DAO did not also support other elements of the proposal, including setting Chaos Labs as the sole risk manager and using Chaos Labs price oracles instead of Chainlink on all new deployments, as well as adopting Chaos Labs vaults as the default vaults (which are not yet audited) for all B2B integrations.
“While we do not see issues with these Chaos products or their future viability, we strongly believe that, given the scale of the Aave protocol, it should maintain at least a two-layer risk management model and vendor lock-in free vaults. Additionally, given the strong track record with Chainlink, we prefer to continue supporting Chainlink for price oracles, which our users are currently more comfortable with at scale,” the DAO added.
For the immediate future, Aave Labs will work closely with LlamaRisk to ensure a smooth transition and uninterrupted risk coverage for the protocol.
Aave protocol is a decentralized, open-source, and non-custodial money market protocol. Depositors earn interest by providing liquidity to lending pools, while borrowers can obtain overcollateralized loans by using the liquidity from these pools. AAVE is trading at $91.81 per token, down 3.8% in the last 24 hours.
