AAVE, the native token of the decentralized lending protocol of the same name, fell to a nearly two-year low Tuesday amid ongoing DAO disputes and following its recent V4 protocol launch. 

The Ethereum-based token fell to a recent low of $86.15 earlier Tuesday, marking the lowest price registered since July 2024. It has ticked back up to a recent price of $89.12, still showing a nearly 17% drop in the last month of trading and down more than 86% from its 2021 all-time high mark of $661.69. 

A significant portion of those losses have come in the last 24 hours, as AAVE has fallen more than 6% in the aftermath of Chaos Labs—a blockchain risk management firm—announcing it will depart as one of two risk managers for Aave’s decentralized autonomous organization (DAO). 

“Since November 2022, Chaos Labs has priced every loan initiated on Aave and managed risk across all Aave V2 and V3 markets and networks, with zero material bad debt,” Chaos Labs founder Omer Goldberg posted on X. 

“Today, we are stepping down from that mandate and seeking to proactively terminate our engagement,” he added. 

Goldberg’s firm’s decision was “not made in haste,” he said, noting that Chaos made the decision because of other core contributor departures, an expanded risk scope with the launch of Aave V4, and operational losses that come with the engagement. 

The alternatives—staying with the engagement and losing money, or making do with the resources despite “knowing it's not enough to execute at the standard the largest DeFi application in the world demands”—were not worth it, he said, noting that the firm passed up an offer to nearly double its annual fee to $5 million. 

The firm’s departure from the engagement with the Aave DAO leaves LlamaRisk as the leading crypto lending protocol’s only risk manager in the immediate future. The firm will work alongside Aave Labs, the team behind the protocol, to “ensure a smooth transition and uninterrupted risk coverage for the protocol,” according to Aave founder and CEO Stani Kulechov. 

We respect the decision of Chaos Labs to step down as one of the two risk managers for the Aave DAO.

We want to thank Chaos Labs for their work over the years. They have been a valuable partner to the Aave DAO, and their contributions have helped Aave grow and mature.

There is…

— Stani (@StaniKulechov) April 6, 2026

“LlamaRisk already serves as a risk contributor to the Aave DAO and has deep familiarity with the protocol’s architecture and parameters,” Kulechov said in a post on X.

“We support LlamaRisk increasing their budget to accommodate this additional workload and expanding their team as needed. Aave Labs will also contribute engineering and analytical resources wherever necessary to support this transition,” he added. 

While Kulechov thanked Chaos Labs for its contributions to the protocol over the years in his own remarks, the attitude towards the departure seemed less cheery in a post that Kulechov re-posted on the matter—an action often construed as an endorsement. In that post, an X user said the events showed that “Chaos Labs tried to strongarm Aave,” and called the requests from Chaos to stick around “overbearing demands.”

Chaos Labs is not the first departure from the Aave ecosystem in the last few months. In February, development firm BGD Labs announced it was leaving Aave, citing “radically” changing alignment in the the organizational structure of the DAO as Aave Labs sought to become a “more central contributor” to the ecosystem.

ACI announced it was leaving shortly after, echoing the BGD Labs sentiment by saying “there is no role for an independent service provider in an environment where the largest budget recipient holds undisclosed voting power and uses it on its own proposals.” 

Aave is the largest decentralized finance (DeFi) protocol in existence, with more than $24 billion in total value locked (TVL), according to data from DeFiLlama. The protocol just recently launched its enhanced V4 protocol, offering new functionality in borrowing and lending and a new “hub and spoke” model for liquidity management, which consolidates liquidity on the protocol. However, the V3 protocol remains substantially more active and popular, given that V4 only debuted last week.

A user of the platform recently lost around $50 million after manually bypassing a warning that asked them to approve an extreme slippage quote, meaning that the actual execution of the trade varied greatly from the expected outcome. In the scenario, the user attempted to swap around $50 million in stablecoins for the AAVE token—but ultimately ended up with just $36,100 in return. 

The platform has remained an integral part of on-chain DeFi, experiencing a jump of nearly 100% in active users over the last six months, reaching an all-time high of around 155,000 in February.