Aave Mired in a Crisis of Confidence: Service Providers Exit En Masse, Failures in Technology, Governance, and Risk Control

marsbitОпубліковано о 2026-04-10Востаннє оновлено о 2026-04-10

Анотація

Aave, a leading DeFi lending protocol, is facing a severe internal crisis marked by the departure of key service providers, raising concerns about its governance, security, and future direction. The crisis began when Chaos Labs, the protocol's long-time risk management provider, terminated its relationship with Aave. The firm cited financial losses, the exit of other major contributors, and fundamental disagreements over the risk architecture of the upcoming Aave V4. Aave Labs declined Chaos Labs' demands for a significant fee increase and exclusive control over key functions like risk management and oracle services. This exit followed the departure of two other critical partners. BGD Labs, the primary technical contributor to Aave V3, accused Aave Labs of forcing an aggressive transition to V4 by limiting V3 development and devaluing its work. Subsequently, the Aave Chan Initiative (ACI), a major governance service provider, announced its planned exit, criticizing Aave Labs for centralizing power and controlling a large portion of voting tokens. The conflict highlights a central paradox within DAOs: the tension between founder-led vision and decentralized governance, and between long-term protocol health and short-term capital interests. Aave Labs is pushing for a more integrated and efficient "Aave Will Win" model with V4, arguing it is necessary for competing at an institutional level. However, critics warn this centralization comes at the cost of the protocol's decentr...

Author: Jae, PANews

Rather than external pressures from the bear market, Aave's internal issues have instead birthed a "black swan."

Aave, long perched atop the lending sector throne, is experiencing the most severe ecosystem shock since its inception. There was no hacker attack, no code vulnerability—only a loss of control and a clash of interests.

From the decisive departure of its technical pillar BGD Labs, to the public split with governance pioneer ACI (Aave Chan Initiative), and now the official severance of ties with risk management steward Chaos Labs, a "great retreat" of service providers is underway.

The depth of this struggle far exceeds a mere partnership dispute; it triggers the ultimate paradox of a DAO (Decentralized Autonomous Organization): the opposition between founder's will and distributed governance, the conflict between protocol long-termism and capital's short-term profit-seeking, and the balance between decentralized faith and centralized efficiency for a blue-chip protocol during its scaling phase.

Can Aave continue to win?

Chaos Labs Abandons the Risk Management Gate: What's the Hidden Reason?

On April 7th, Chaos Labs, deeply involved with Aave V2/V3 for three years and achieving "zero major bad debt," announced it was cutting ties with Aave. The exit of this top-tier risk control firm directly hit Aave's security red line.

Chaos Labs cited three reasons: long-term losses, the departure of key contributors BGD Labs and ACI, and fundamental disagreements with Aave Labs on risk management philosophy in the context of the Aave V4 launch.

The focal point of the conflict is V4's "Hub-and-Spoke" architecture: Chaos Labs pointed out that while this design improves capital efficiency, it also exponentially amplifies risk. In an environment with unclear legal liability definitions, the risk control team would need to double their workload to maintain both the massive V3 and V4 systems simultaneously.

Aave Labs expressed respect for this decision and thanked them for their years of contribution, stating that the protocol's smart contracts and network deployments remain unaffected. However, the parting of ways had underlying reasons.

Aave Labs disclosed that it had engaged in multiple rounds of negotiations with Chaos Labs regarding a renewal proposal. It supported increasing their risk management fee from the current level to $5 million but did not support directly raising it to $8 million without subsequent附加条款 (fùjiā tiáokuǎn - additional clauses). It also explicitly opposed three exclusivity clauses: appointing Chaos Labs as the sole risk manager, replacing Chainlink with the Chaos Labs oracle, and setting the unaudited Chaos Labs treasury as the default treasury for all B2B integrations.

Simply put, Chaos Labs wanted to expand its control and commercial interests. But for a DeFi protocol, over-reliance on a single supplier for risk management significantly increases systemic risk and weakens the protocol's own governance independence. For Aave, the potential risk was too great.

Furthermore, in March of this year, the Aave CAPO oracle managed by Chaos Labs suffered an on-chain configuration error, leading to the undervaluation of wstETH by approximately 2.85% and mistakenly triggering the forced liquidation of healthy positions worth about $27 million.

Aave Labs emphasized it will continue to adhere to a two-tier risk management model and introduce a third-tier technical risk management mechanism led by Aave Labs. During the transition, LlamaRisk will take over more risk coverage duties from Chaos Labs, with Aave Labs supporting its team expansion and budget, and providing engineering and analytical resources to ensure a smooth handover.

Regarding Aave V4, its architecture introduces isolated risk markets, new liquidation logic, and governance-controlled parameter mechanisms through Spokes, allowing the DAO to manage risks across different markets and assets more granularly. In the short term, Aave Labs will work closely with LlamaRisk to ensure a smooth risk management transition and unaffected protocol operation.

Technology and Governance Also Falter, Internal Risks at Aave Intensify

Beyond the security front, Aave's technology and governance have also faltered in the past two months.

On April 1st, Aave V3 technical service provider BGD Labs announced the termination of all technical contributions—this was no April Fool's joke. As the main development team for V3, BGD accused Aave Labs of "artificially limiting" V3 feature development and "malignantly devaluing" its worth to强行推行 (qiángxíng tuīxíng - forcibly push) the immature V4, even using parameters to force user migration.

BGD stated that V3 contributed 98% of Aave's code and nearly all its TVL, generating over $100 million in annual revenue, and was the "jewel" in the protocol's crown. Aave Labs closed V4 development to external teams, excluding them. BGD Labs had neither a voice nor fair compensation and could only protest this "radical transition" and irresponsibility towards user asset security by leaving.

The governance service provider ACI, led by Marc Zeller, also plans to exit in July, directly triggered by BGD Labs' departure. Marc Zeller blasted Aave Labs for initiating a "slow-motion coup": on-chain data shows it controls 23% of the AAVE token supply, with its whale voting power overwhelming community proposals.

ACI's exit signals Aave's governance moving from "checks and balances" towards "centralization," with third-party service providers reduced to mere ornaments.

Although Aave was once a model of distributed collaboration in the DeFi market—Aave Labs setting the course, third-party service providers handling development, governance, and risk control, with multiple parties complementing each other to support its leading lending position—cracks are now increasingly appearing in this golden system that operated for years.

Growing Pains or Fatal Illness? Aave Faces a Test of Capital and Trust

Amidst this complex melee, the interests of the involved parties paint starkly different pictures.

From the perspective of Aave Labs and founder Stani Kulechov, they hope to transform the protocol from a loose multi-party collaborative body into a more cohesive and efficient closed-loop ecosystem through V4 and the "Aave Will Win" framework.

The business logic behind this transformation is: DeFi has entered a scaling phase where loose collaboration alone can hardly meet institutional demands and global financial competition.

By concentrating resources on developing high-margin products and unifying brand ownership, Aave can improve execution efficiency, reduce fragmented decision-making, and enhance the value capture ability of the AAVE token.

Of course, this is also a problem mature DeFi protocols will face during scaling, and Aave's internal turmoil, as the lending leader, is magnified, becoming a mirror for the entire DeFi governance model.

However, this efficiency gain through "strongman rule" is seen as coming at the cost of the DAO's decentralized credibility.

Service providers essentially rely on professional skills to obtain funding from the DAO. When Aave Labs tries to marginalize them, or the compensation provided is insufficient to offset the growing legal and operational risks, they will inevitably choose to leave. This also reveals that under the current DAO service provider model, even top-tier teams face unsustainable business models.

For Aave, will the service provider exodus be short-term growing pains or a long-term fatal illness?

From an optimistic view, the wave of service provider departures might be a bout of "growing pains" during Aave's transformation.

Streamlined Decision-Making: With multiple external stakeholders gone, Aave Labs can advance V4 more unimpeded, shortening product launch cycles in the face of fierce market competition;
Frontend Revenue Recirculation: If the "Aave Will Win" proposal ultimately achieves 100% frontend revenue returning to the DAO, the AAVE token will transform from a mere "governance token" into a genuine "revenue certificate";
Unified Technical Paradigm: V4's "Hub-and-Spoke" architecture solves the multi-chain fragmentation issue of V3. By unifying liquidity hubs, Aave is poised to gain a foothold in the RWA and institutional credit markets.

However, these positive expectations are largely based on the assumption that "everything goes smoothly." The realistic negative impacts are more pressing.

Security Downgrade: V4's complexity requires stricter risk control mechanisms. After losing Chaos Labs, Aave now relies solely on LlamaRisk as its primary risk control service provider, creating a single point of failure that greatly increases systemic risk during extreme market conditions.
Experience Vacuum: The departing service providers take with them three years of historical operational data and experience. If the protocol encounters a sudden incident, newly接手 (jiēshǒu - taking over) teams like LlamaRisk might respond slowly due to lack of deep involvement;
Reputation Damage: Aave Labs' intervention in voting through substantial token holdings is essentially透支 (tòuzhī -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 -透支 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If the DAO loses its checks and balances mechanism, its appeal to new developers will be greatly diminished.

These negative impacts are also raising concerns among capital. Although Aave has not experienced very serious security incidents in the past, the uncertainty of risk is rising, and the community is beginning to question its execution and risk control capabilities. Some bluntly state, "When the old crew disembarks en masse and the new crew isn't familiar with the route yet, don't put all your assets on board."

Currently, Aave stands at a critical crossroads.

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QWhat are the main reasons behind the recent departure of key service providers from Aave?

AThe main reasons include disagreements over the V4 upgrade's risk management model, concerns over centralization of power by Aave Labs, insufficient compensation for service providers, and fundamental differences in vision for the protocol's future.

QHow does the departure of Chaos Labs impact Aave's risk management framework?

AChaos Labs' departure creates a significant gap in Aave's risk management, potentially increasing systemic risk. It leaves LlamaRisk as the primary risk service provider, raising concerns about single-point vulnerabilities and the loss of three years of operational experience and data.

QWhat is the 'Hub-and-Spoke' architecture in Aave V4, and why is it controversial?

AThe 'Hub-and-Spoke' architecture is a new design in Aave V4 intended to improve capital efficiency by creating a central liquidity hub connected to various isolated risk markets (spokes). It is controversial because critics, like Chaos Labs, argue it exponentially amplifies risk and creates a much larger, more complex workload for risk managers.

QWhat accusations did BGD Labs make against Aave Labs when announcing their departure?

ABGD Labs accused Aave Labs of 'artificially limiting' V3 features, 'maliciously devaluing' its contributions, and forcing user migration to the new V4. They claimed they were excluded from V4 development and left with no say in the process and no fair compensation.

QWhat is the 'Aave Will Win' framework, and what are its potential benefits and drawbacks according to the article?

AThe 'Aave Will Win' framework is a strategic vision led by Aave Labs to transform the protocol into a more cohesive and efficient ecosystem. Potential benefits include streamlined decision-making, 100% front-end revenue returning to the DAO (making the AAVE token a yield-bearing asset), and a unified technical paradigm for scaling. The main drawback is the perceived sacrifice of the protocol's decentralized credibility and governance, leading to a 'centralized' power structure.

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STAR 50 Soars 10.73%, Why Did A-Shares Stage a "V-Shaped Reversal"?

After a prolonged decline, the Chinese A-share market staged a strong rally on July 21. The STAR 50 index surged 10.73%, its largest single-day gain in nearly a year, leading a broad-based "V-shaped" reversal. The Shanghai Composite Index rose 1.79%, the Shenzhen Component Index gained 4.81%, and the ChiNext Index jumped 7.05%. Total market turnover reached 2.97 trillion yuan, an increase of 256.1 billion yuan from the previous session, with over 3,100 stocks advancing. The semiconductor sector spearheaded the rebound, with related ETFs posting significant gains. Analysts attribute the surge to three converging factors. First, coordinated capital inflows from "national team" institutions, insurance funds, listed company buybacks, and fund house self-purchases have bolstered market liquidity and confidence. Second, supportive policy signals, including commitments from regulators to ensure stable market operations, provided a favorable backdrop. Third, a stabilization and recovery in overseas markets, notably South Korea, created a positive external environment. Institutions suggest the most severe panic selling phase for the tech sector has likely passed, following a significant digestion of crowded positions and leveraged funds. While short-term volatility may persist, the medium to long-term outlook remains underpinned by enduring trends like AI computing demand expansion and semiconductor localization. The market's focus now shifts to the sustainability of supportive fund flows, earnings reports, and upcoming catalysts from the global AI industry chain.

marsbit28 хв тому

STAR 50 Soars 10.73%, Why Did A-Shares Stage a "V-Shaped Reversal"?

marsbit28 хв тому

U.S. Tech Momentum Stocks Post Largest Single-Day Gain Ever, But Is the Plunge Over?

US tech momentum stocks staged a sharp rebound on Tuesday (July 21st). Morgan Stanley's TMT Momentum Factor surged over 12%, marking its largest single-day gain on record, exceeding even peaks from the 2000 dot-com bubble. Key momentum indices from Goldman Sachs also posted their strongest daily performances in years. The rally was led by semiconductors, with the Philadelphia Semiconductor Index jumping 4.6%. This rebound followed three consecutive down days and a cumulative 33% plunge in momentum stocks, one of the steepest drawdowns since the dot-com era. Analysts attribute the surge largely to a short squeeze. Heavy selling had pushed high-beta momentum stocks into deeply oversold territory, forcing many short sellers, particularly in Asia, to cover their positions, creating a self-reinforcing buying spiral. However, the rebound's internals appear weak. Trading volume was notably low, and advancing stocks still lagged decliners on the S&P 500, indicating a narrow, concentrated rally rather than broad market participation. Diverging views emerge on the outlook. BTIG warns the bounce has hit key resistance and recommends selling into strength, citing extreme volatility and historical parallels to past market tops. Conversely, Goldman Sachs and UBS believe the momentum unwind is nearing its end, suggesting it may be time to gradually add exposure, as positioning has been significantly reduced. They caution, however, that high volatility warrants a measured approach, potentially using defined-risk strategies. The upcoming earnings season, particularly reports from major tech firms like Alphabet, is seen as a critical test for the rally's sustainability. Simultaneously, bond markets flashed a warning, with yields rising partly due to spiking oil prices. Analysts note that if long-term Treasury yields break decisively higher, it could pose a significant headwind for equities, especially growth stocks.

marsbit35 хв тому

U.S. Tech Momentum Stocks Post Largest Single-Day Gain Ever, But Is the Plunge Over?

marsbit35 хв тому

U.S. Tech Momentum Stocks Record Largest Single-Day Gain Ever, but Has the Rout Ended?

U.S. tech momentum stocks staged a dramatic rebound on Tuesday, July 21st. Key momentum indices like the Morgan Stanley TMT Momentum Factor and Goldman Sachs' High Beta Momentum Long Index posted historic or near-historic single-day gains, fueled largely by semiconductor stocks. This sharp rally followed a severe three-day sell-off that saw momentum stocks plunge 33%, marking one of the steepest pullbacks since the dot-com bubble. Analysts attribute the bounce primarily to a short squeeze, as forced covering from over-leveraged traders, particularly in Asia, created a buying spiral. However, the rally's health is questioned due to weak market breadth—overall trading volume was low, and decliners outnumbered advancers in the S&P 500 despite the index's gain—suggesting a narrow, concentrated surge rather than broad recovery. Opinions on the sustainability diverge. BTIG strategists warn the rebound has hit key resistance levels, citing extreme volatility and historic stock dispersion as signs of an ongoing broader correction, and recommend selling into strength. Conversely, Goldman Sachs and UBS view the aggressive momentum unwinding as nearing its end, noting reduced positioning and a lack of new fundamental catalysts. They suggest the sell-off presents a selective opportunity to add exposure, albeit cautiously and gradually using defined-risk strategies. The immediate trajectory hinges on the ongoing earnings season, with market focus on Alphabet's capital expenditure guidance for AI investment clarity. Meanwhile, bond markets present a risk, with rising Treasury yields—potentially heading toward 5.5%—and widening credit spreads for mega-cap tech companies posing a threat to equity valuations. The combination of technical factors, earnings results, and macro conditions leaves the durability of the rebound in doubt.

链捕手38 хв тому

U.S. Tech Momentum Stocks Record Largest Single-Day Gain Ever, but Has the Rout Ended?

链捕手38 хв тому

Bitcoin flashes 3 macro-bottom signals – But can BTC reach $70K?

The article discusses Bitcoin's recent price movement above $66,000 and a shift in market analysis from focusing on a local bottom to a potential macro-cycle bottom. It cites a crypto analyst noting that BTC has flashed three historical technical signals that previously coincided with major market bottoms in 2015, 2019, and 2022, suggesting the current zone could be a strong long-term accumulation area. However, the article also highlights a significant challenge: despite the price breakout, on-chain data shows a lack of supporting liquidity. Stablecoin dominance is rising while the total stablecoin market cap is shrinking, with capital continuing to leave exchanges. This divergence indicates that while the technical setup is bullish, the rally may struggle to sustain enough momentum for a decisive move into the $70,000 region without an influx of fresh capital.

ambcrypto40 хв тому

Bitcoin flashes 3 macro-bottom signals – But can BTC reach $70K?

ambcrypto40 хв тому

Long-Divided Must Unite, Long-United Must Divide: When L1 Becomes Its Own Rollup, What Is Ethereum's Endgame?

"The Inevitable Cycle: When L1 Becomes Its Own Rollup – What is Ethereum's Endgame?" For years, the Ethereum community grappled with concerns that L2s were fragmenting the ecosystem and eroding L1's value. While L2s provided cheaper execution, they also splintered liquidity and the unified user experience of a single chain. This has prompted a fundamental reassessment of the relationship between L1 and L2. Ethereum's roadmap is evolving. The "Scale" initiative merges L1 and L2 expansion into a holistic framework. L1 itself is advancing with higher gas limits, statelessness, and zkEVM verification, no longer content to be just a low-throughput settlement layer. Consequently, the primary value proposition of L2s is shifting from merely providing cheap blockspace to offering L1 cannot easily provide: application-specific optimizations, privacy features, and flexible governance models. L2s are becoming a spectrum of execution environments with varying degrees of security inheritance from Ethereum. A critical challenge in this multi-chain future is interoperability. The vision is to make Ethereum "feel like one chain again." This relies on advancements in native account abstraction (like EIP-7702) and intent-based architectures (Open Intents Framework), where users declare desired outcomes, and solvers handle the complex cross-chain execution. Furthermore, shortening Ethereum's finality time from minutes to seconds is crucial, as it underpins trust between chains for bridges, stablecoins, and cross-chain applications. Perhaps the most provocative idea is that Ethereum L1 itself could become a form of "its own Rollup." As zkEVM and proof systems mature, high-performance nodes could execute transactions and generate validity proofs. Regular validators would then verify these proofs instead of re-executing all transactions. This blurs the traditional L1/L2 hierarchy, making "Rollup" more of a general execution-verification architecture. Native Rollup aims to integrate L2 validation more directly into the Ethereum protocol, allowing L2s to inherit L1's security more fully and move away from reliance on security councils. In the end, L2s are not destined to replace L1 or be made obsolete by it. The likely future is a unified system where diverse execution environments—each optimized for specific use cases like DeFi, gaming, or privacy—coexist. They will share a common foundation of security, liquidity, and verifiable state, seamlessly connected to restore a cohesive user experience. The next phase for Ethereum is not just about scaling through separation, but about intelligently reintegrating what was separated back into a coherent whole.

链捕手54 хв тому

Long-Divided Must Unite, Long-United Must Divide: When L1 Becomes Its Own Rollup, What Is Ethereum's Endgame?