Chaos Labs ends risk management partnership with Aave

Risk management firm Chaos Labs has officially announced the end of its partnership with the crypto lending protocol Aave. The firm explained that despite Aave's proposal for a budget increase, it decided to terminate the agreement due to growing risks. These risks stem from the design of the upcoming Aave V4, a lack of operational resources, and the departure of key personnel. Chaos Labs stated that Aave V4's completely new architecture would necessitate rebuilding the entire risk infrastructure from scratch, a process expected to be highly costly. The firm added that it has been providing services at a loss for the past three years and determined the proposed budget was insufficient to meet the security standards for the world's largest DeFi app. Aave currently allocates only about 2% of its budget to risk management, an amount Chaos Labs believes needs to be increased.