The AAVE token, native to its decentralized lending protocol, reached a nearly two-year low on Tuesday amid DAO disputes and following the launch of its V4 protocol. The Ethereum-based token dipped to $86.15 earlier in the day—its lowest since July 2024—and has since risen slightly to $89.12. This represents a nearly 17% decline over the past month, with an overall drop exceeding 86% from its all-time high of $661.69 in 2021.
Chaos Labs, a blockchain risk management firm, announced it would step down as one of Aave’s two risk managers for the DAO. “Since November 2022, Chaos Labs priced every loan on Aave and managed risks across all V2 and V3 markets,” founder Omer Goldberg wrote on X. The decision wasn’t hasty; Chaos cited recent core contributor exits, expanded risks with Aave V4, and unsustainable operational losses.
Goldberg noted that despite an offer to nearly double their fee to $5 million annually, the firm chose to exit due to inadequate resources to maintain expected standards. With Chaos Labs’ departure, LlamaRisk now serves as the sole risk manager for Aave DAO, working alongside Aave Labs for a smooth transition and continued risk coverage.
“We appreciate Chaos Labs stepping down and their valuable contributions over the years,” said Stani Kulechov, Aave founder and CEO. “LlamaRisk will increase its budget to manage this added workload, with support from Aave Labs as needed,” he added.
While Kulechov expressed gratitude for Chaos Labs’ past work, some interpreted a re-post of a critical comment—suggesting that Chaos attempted to coerce Aave—as tacit approval. This follows recent exits by BGD Labs in February due to alignment issues with the DAO’s structure and ACI citing centralization concerns.
As the largest DeFi protocol, Aave holds over $24 billion in TVL. Its V4 launch introduced new lending features and a liquidity management model, although V3 remains more active post-launch. Recently, a user lost approximately $50 million due to extreme slippage during a stablecoin swap for AAVE tokens.
Despite these issues, Aave’s active user base has surged by nearly 100% over six months, hitting an all-time high of about 155,000 users in February.