Chaos Labs, one of Aave’s key risk managers, is leaving the DeFi lending giant’s ecosystem, marking the latest in a string of high-profile contributor exits that have reshaped the protocol’s core operating team in recent months.

The departure follows earlier exits from major contributors like ACI (Aave Chan Initiative) and BGD Labs, signaling growing internal friction over the protocol’s direction.

Since 2022, Chaos Labs has overseen risk across Aave’s markets, helping the protocol grow from roughly $5 billion to more than $26 billion in total value locked, while maintaining “zero material bad debt.” But despite that track record, the firm says it can no longer continue under current conditions.

“The engagement no longer reflects how we believe risk should be managed,” said Omer Goldberg, CEO of Chaos Labs, in a post on X, pointing to a “fundamental misalignment” with Aave’s evolving strategy.

A key sticking point is Aave’s V4 upgrade, which introduces a new architecture and significantly expands the scope of risk management. Chaos argues this shift increases both operational complexity and responsibility, without a matching increase in resources or alignment.

“Taking on something new responsibly requires new infrastructure… and the full operational burden of going from zero to one again,” Goldberg wrote.

The firm also flagged economics as unsustainable. Even with a proposed $5 million budget, Chaos said it has been operating at a loss and would continue to do so. “Even with an increase of $1m, we’d still be operating Aave’s risk with negative margins,” Goldberg said.

At the same time, Chaos warned that the loss of experienced contributors is raising operational risk, especially as Aave transitions between versions. “Continuity of brand is not the same thing as continuity of system,” Goldberg wrote.

For Aave, the departure leaves open questions around how risk will be managed through its next phase of growth.

CoinDesk reached out to Aave Labs for comment but did not receive a response by the time of publication.

Read more: Aave governance rift deepens as major governance group exits $26 billion DeFi protocol

Tom Lee says Ethereum has become the No. 2 “wartime” asset, outpacing Bitcoin and stocks as war spending surges and crypto gains appeal as a liquidity and risk trade.

Since the latest Middle East conflict escalated, Ethereum has become the second best‑performing major asset globally, trailing only top safe‑haven trades and beating both Bitcoin and equities, according to Fundstrat co‑founder Tom Lee. In a recent post shared by the TomLeeTracker X account, Lee said that while “crypto has been outperforming since the war started,” Ether has led the pack, with Bitcoin ranking third and both digital assets “significantly” outpacing the stock market.

Lee quantified the current war impulse at roughly $30 billion per month in additional government outlays and warned that this figure “could rise to a scale of $100 billion” if the conflict broadens, effectively turning defense budgets into a persistent fiscal shock.

By contrast, he argued that the drag from higher oil is smaller than many investors assume, saying each $10 increase in crude prices adds only about $4 billion to $5 billion per month in pressure on US consumers. That arithmetic, Lee contends, means the net macro effect still leans toward stimulus rather than contraction, even with oil near $100 per barrel.

Fundstrat’s March research, cited by Lee and first reported by DL News and Yahoo Finance, shows Ethereum up roughly 17% on a relative basis versus the S&P 500 since the US‑Israeli conflict with Iran began in late February, beating Bitcoin, gold, real estate, MSCI World Energy and the “Magnificent 7” tech stocks. “As a wartime store of value, crypto looks a lot stronger,” Lee said, adding that “crypto has been outperforming since the war started while gold has actually underperformed,” a view echoed in his call to “ditch gold, buy crypto” during the conflict.

Ethereum’s performance is also underpinned by structural factors, including a market cap near $230 billion, growing institutional positioning and a staking rate approaching 30% of total supply that tightens available float. Lee, a long‑time Ether bull who chairs Bitmine Immersion Technologies, has maintained a long‑term price target of $250,000 for ETH and recently backed that stance with action, as Bitmine disclosed another $133 million purchase that lifted its Ethereum holdings above $9 billion.

Against this backdrop of elevated fiscal spending and volatile energy prices, Lee says the allocation value of crypto as both “liquidity and risk assets” is rising. He argues that defense outlays and still‑accommodative financial conditions create a powerful liquidity environment in which high‑beta assets such as Ethereum and Bitcoin can benefit disproportionately, even as headlines are dominated by war and oil shocks. In earlier research notes covered by outlets like MarketWatch and other financial media, Lee has emphasized that “stock markets bottom in the early stages of military conflict,” suggesting the recent outperformance of Ether and Bitcoin could be an early signal of how capital will be repriced if the conflict and spending surge persist.

Binance faces renewed questions over its $4.3b post-plea cleanup as crime-monitoring staff depart and chief compliance officer Noah Perlman weighs an exit.

Bitcoin (BTC) futures traders added more than $3.8 billion in new leveraged positions over the past 24 hours, with total BTC contract open interest climbing 8.09% to $50.804 billion, derivatives data provider Coinglass shows. The latest spike pushes notional open interest back toward levels seen ahead of previous breakouts, when Bitcoin derivatives positioning has often front‑run spot price moves, according to prior Coinglass‑based analysis.

Coinglass data indicates that Binance currently accounts for $8.887 billion of total Bitcoin open interest, making it the single largest venue for BTC futures risk. Bybit’s open interest stands at $4.386 billion, just ahead of Gate’s $4.285 billion, while OKX controls $2.982 billion in outstanding contracts, based on the latest exchange breakdown. Earlier crypto.news reporting on Bitcoin derivatives has highlighted how similar 5%–8% one‑day jumps in open interest have preceded both sharp rallies and sudden liquidations, underscoring that the direction of the next move often depends on whether new positions skew long or short.

The fresh build‑up follows a period of “quiet de‑leveraging” in late 2025, when total BTC futures open interest slipped toward the mid‑$50 billion range and fell roughly 2% in a single day, according to Coinglass‑sourced analysis cited by crypto.news. At that time, aggregate open interest of about 647,700 BTC — roughly $59 billion — suggested systematic trimming of risk rather than panic, as positions eased across CME, Binance, and offshore venues.

By contrast, today’s $50.804 billion figure, up 8.09% in 24 hours, points to traders re‑leveraging into the market, similar to moves seen in May 2025 when Bitcoin futures open interest reached an all‑time high of around $75 billion. In that earlier episode, CME led with $17.43 billion in OI, followed by Binance at $12.41 billion, while an 8% daily jump in Binance’s BTCUSDT open interest alone — equivalent to roughly 10,000 BTC — signaled aggressive positioning that later amplified price volatility.

Open interest measures the total value of outstanding futures that have not been closed and is often used as a proxy for how much leverage is in the system. Rising OI alongside rising prices can indicate new money betting on continuation, while rising OI with flat or falling prices can mark the build‑up of crowded shorts or hedges that may be vulnerable to a squeeze. As of now, Coinglass and other derivatives dashboards show BTC futures open interest near the low‑$50 billion area, below the $57 billion–$75 billion peaks seen during late‑2024 and mid‑2025, but well above levels associated with prior cycle lows.

US Senate Banking Committee member Bill Hagerty said Monday that he expects a potential path for a digital asset market structure in the coming weeks after months of delays in Congress.

Speaking at the Digital Assets and Emerging Tech Policy Summit at Vanderbilt University, he said his fellow Republican lawmakers planned to move the bill through the banking panel starting next week.

“We will be in a position, I hope, to bring all of this together very soon,” said Hagerty, referring to work on the bill in the Senate. “On the banking committee side, I think we’re very close, and my expectation is that we get it into committee in this next work period that starts on Monday of next week, so that over the next several weeks we should have this into the banking committee.”

The Tennessee senator added:

“There’re several issues still outstanding, I think none of them are insurmountable and we will get to a point I believe in April that we’ll have it out of the banking committee. There’s still a lot more work to do.”

Originally titled the CLARITY Act when it passed the House of Representatives in July, the bill is considered by many lawmakers and industry leaders to be one of the most significant pieces of crypto legislation, but it has faced delays in Congress amid government shutdowns, industry pushback on stablecoin yield and ethics concerns.

It is expected to provide a comprehensive framework for cryptocurrencies in the US, including largely changing oversight of the market from the Securities and Exchange Commission (SEC) to the Commodity Futures Trading Commission (CFTC). 

Because both agencies are involved, the legislation would need approval from the committee responsible for commodities — Senate Agriculture — and that for securities, the banking committee. The agriculture committee advanced its version of the crypto bill in a January markup, but concerns over tokenized equities, ethics, and stablecoin yield have delayed consideration in the banking committee, which needs to hold a markup before a potential floor vote in the Senate.

Related: CFTC chair says agency is ready to oversee entire crypto market

“We’re going into the midterms,” said Hagerty. “I think if we get this done in April, we can clearly get this taken care of before the midterms.”

Limited window for market structure as crypto potentially influences US elections again

Hagerty’s comments echoed those of Coinbase chief legal officer Paul Grewal, who said last week that lawmakers were “close to a deal” on stablecoin yield and other issues in the market structure bill.

According to the Coinbase-backed advocacy group Stand With Crypto, the way lawmakers vote on the legislation could impact their chances for the 2026 midterms, setting the stage for crypto interest groups to potentially influence another major US election.

The crypto-backed political action committee (PAC) Fairshake, which reported spending more than $130 million on media buys in the 2024 elections, said in January that it had a $193-million war chest ahead of the November 2026 midterms.

The group is not alone in its support for crypto on the national stage. The Fellowship PAC, which claimed to have raised “over $100 million” from undisclosed backers aligned with the crypto industry, announced the appointment of Tether executive Jesse Spiro as chair on Wednesday.

Magazine: Clarity Act risks repeat of Europe’s mistakes, crypto lawyer warns