Aave Governance Crisis Erupts: Discrepancies Between the DAO and Aave Labs Intensify, Founder Increases Holdings Spark Controversy

In December 2025, the leading DeFi lending protocol Aave was caught in an intense governance turmoil. The core conflict focused on the control of brand assets, revenue distribution, and the power boundaries between the DAO and the development entity Aave Labs. This event not only sparked a community split but also led to a short-term drop of over 10% in the price of AAVE tokens, accompanied by significant sell-offs.
Crisis Cause: Controversy Ignited by Shift in Front-End Revenue
The controversy originated from Aave Labs switching the front-end token swap integration from ParaSwap to CoW Swap in early December. This move redirected the token swap fees (approximately $10 million annually) that would have originally flowed to the DAO to a wallet controlled by Labs. Community representatives, such as Aave Chan Initiative founder Marc Zeller, referred to this as "invisible privatization," arguing that Labs extracted value using the brand and infrastructure funded by the DAO without undergoing governance voting.
Aave Labs and founder Stani Kulechov defended that the frontend revenue was originally private property of Labs, and the previous "donation" to the DAO was only due to regulatory uncertainty, not an obligation. Labs emphasized that it is responsible for frontend maintenance, custody, and security expenses, while the DAO controls the core revenue of the protocol (over $100 million annually).
Brand control has become the focus.
The controversy quickly escalated to the ownership of brand assets. Ernesto Boado, co-founder of BGD Labs, proposed a plan to transfer the domain name, social media accounts, trademarks, and naming rights to a legal entity controlled by the DAO, and to establish an anti-capture protection mechanism. The proposal aims to clarify the DAO's sovereignty over the brand and to prevent Labs from unilaterally "privatizing" the value co-created by the community.
On December 22, Aave Labs unilaterally moved the proposal to the Snapshot voting phase, with the voting period until December 26 (Christmas holiday). Boado publicly expressed his disagreement with this move, stating that it "undermines community trust" and is being rushed. Marc Zeller criticized the timing of the vote during the holiday, intending to reduce participation. Stani responded that they had discussed for 5 days, which complies with the governance framework, and called for a resolution through voting.
Extreme voices have appeared in the community, suggesting a "poison pill" proposal for the DAO to completely absorb Aave Labs and reclaim historical revenue, but it has not received mainstream support.
Founder Stani's large shareholding increase raises questions.
During the crisis, Stani Kulechov recently purchased 32,660 AAVE for approximately $5.15 million (1,699 ETH), increasing his total holdings to 84,033 AAVE (worth about $12.6 million), with current unrealized losses of about $2.29 million. Some voices in the community question whether this move is aimed at expanding voting power and further intensifying concerns over governance rights. Stani has previously stated that his team is one of the largest holders of AAVE and emphasized their long-term commitment to the protocol.
Market reaction: Price plummeted, sentiment is bearish.
Governance disputes directly impact the market. The AAVE token fell by about 10-15% in the short term, once touching around $150, accompanied by large whale sell-offs (for instance, one address liquidated over $37 million in AAVE). Discussions on social platforms have surged, and panic sentiments are spreading. Some holders are calling for the DAO to gain greater powers to ensure alignment of interests between the team and the community.
Famous crypto KOL Wazz commented that this round of decline may provide buying opportunities. If governance does not have further negative impacts, it may be worth considering buying at lower levels; however, if there is a sustained large selling pressure, one should stop-loss. Overall market sentiment is bearish, and there are short-term speculative rebound opportunities, but caution is needed regarding the uncertainty of holiday voting results.
Prospect: The Battle of DeFi Governance Paradigms
This crisis exposes the pain points of the DeFi hybrid governance model: while the DAO controls the on-chain protocols, off-chain assets such as branding and interfaces are often held by centralized teams. Aave, as a leader with a TVL exceeding $30 billion, will set a precedent for the entire industry. If the proposal is approved, the power of the DAO will be significantly enhanced; if rejected, it will reinforce the control of Labs over the distribution layer.
Regardless of the outcome, this event serves as a reminder to the community: the value of governance tokens ultimately depends on the clarity and enforcement of power boundaries. If Aave can stabilize the situation, it may restore confidence; otherwise, short-term volatility may continue. Investors should closely monitor the progress of Snapshot voting and rationally assess risks. #Gate社区圣诞氛围感