Aave Loses Chaos Labs

Happy Monday, Defiers!

TL;DR:

Chaos Labs announces Aave exit
Ethena strikes institutional lending deals
Polymarket unveils collateral token
Why Now Is the Best Time to Stake ETH on Rocket Pool [SPONSORED]

Let’s dive in.

Markets rallied on Monday, buoyed by reports that mediators have submitted a 45-day ceasefire proposal to the U.S. and Iran. BTC is pushing back toward $70,000, while ETH is over $2,140, outperforming the top-ten crypto assets on the daily and weekly timeframes.

After triumphantly launching v4 at EthCC last week, the Aave ecosystem is suffering yet another blow, as Chaos Labs announced its departure today, becoming the third major core contributor to leave Aave in two months. Chaos’ decision follows a governance dispute that began in December, as well as the contentious “Aave Will Win” proposal; Chaos cited fundamental disagreements over risk management, as well as funding issues.

Also in DeFi today, synthetic dollar protocol Ethena announced it’s moving beyond its crypto basis trade roots into institutional lending, real-world credit, and equity and commodity perpetuals. The sweeping plan to diversify the reserves backing its synthetic dollar, USDe, includes direct lending agreements with Anchorage Digital, Maple Institutional, and Coinbase Asset Management.

Finally, the largest on-chain prediction market platform, Polymarket, unveiled its own collateral token, Polymarket USD, which will replace USD.e (bridged USDC) as the platform’s settlement asset. The new token, which is backed 1:1 by USDC, is part of a larger infrastructure upgrade for Polymarket.

Read more below! But first, please give our sponsors some love; they make this newsletter possible.

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We’re back! Here’s what you need to know in web3 today

📈 Markets in the Past 24 Hours

TICKER	VALUE	24H
Bitcoin	$69,837	3.65 %
Ethereum	$2,144.57	4.02 %
BNB	$606.32	2.23 %
XRP	$1.34	3.12 %
Solana	$82.09	2.92 %

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🎬WATCH

The DeFi Exploit That Exposed a Bigger Problem

In this episode of The Defiant Podcast, Cami sits down with Omer Goldberg, founder of Chaos Labs.

A new DeFi exploit triggered millions in losses, but the deeper story is about risk. Goldberg explains how the attack unfolded, why the damage spread across lending markets, what vault curators got wrong, and whether DeFi is truly ready for mainstream adoption.

Watch the full interview:

Chaos Labs Terminates Aave Engagement Citing Risk Misalignment and Inadequate Funding

Chaos Labs, the risk management firm that has “priced every loan on Aave since November 2022,” announced today that it is proactively terminating its engagement with DeFi’s largest lending protocol, citing a fundamental disagreement over how risk should be managed.

Why it matters: Chaos is the third core contributor to exit Aave's operations in recent months, following BGD Labs and Aave-Chan Initiative (ACI).

Ethena Strikes Lending Deals With Anchorage and Maple amid USDe Reserve Overhaul

Ethena Labs is finalizing its first direct lending agreements with Anchorage Digital, Maple Institutional, and Coinbase Asset Management as part of a sweeping plan to diversify the assets backing its synthetic dollar asset, USDe.

Why it matters: The institutional lending push is one piece of a broader four-part diversification strategy that also includes RWA exposure beyond T-bills.

Polymarket Unveils Collateral Token to Replace Bridged USDC

Polymarket on Monday unveiled Polymarket USD, a proprietary collateral token backed 1:1 by USDC that will replace bridged USDC.e as the settlement asset across the on-chain prediction market.

Why it matters: The new token is the centerpiece of what Polymarket called its most significant infrastructure change to date, which it will roll out over the next 2-3 weeks.