<b>Aave Ends Partnership with Chaos Labs Amid Risk Governance Dispute</b>

Aave, a prominent player in the decentralized finance (DeFi) space, has ended its three-year partnership with Chaos Labs, its primary risk service provider. The decision was made due to a budget dispute and differing views on risk management.

According to Omer Goldberg, founder of Chaos Labs, the decision was deliberate and not made in haste. Aave had offered to increase Chaos's budget to $5 million, but the parties could not reconcile their risk-management philosophies.

Aave's two-layer economic risk model, which blends on-chain risk pricing with external risk data, has been a cornerstone of its risk infrastructure since November 2022. However, Chaos's push to become the sole risk provider and replace Chainlink's oracles and other partners was seen as a threat to Aave's diversified risk framework.

The departure of Chaos Labs is a significant development in DeFi risk governance, highlighting the tension between single-provider models and multi-layered risk frameworks. As Aave continues its transition to V4, it will rely on LlamaRisk and other partners to ensure a smooth migration.