Aave’s Governance Crisis: A Deepening Divide Between Aave Labs and DAO
Aave’s impressive $140 million revenue year has been overshadowed by a failed vote on brand control, a $10 million AAVE purchase, and a brutal leadership conflict that is taking a toll on the token’s value. The recent governance drama has turned into an open confrontation, with founder Stani Kulechov emphasizing the DAO’s significant revenue and his commitment to clarifying the economic interests between Aave Labs and $AAVE token holders.
DAO Revenue and Governance
The DAO’s revenue this year has surpassed the total revenue of the previous three years, with funds controlled by AAVE holders. However, a proposal to transfer brand assets from Aave Labs to the DAO failed, with 55% voting against and 41% abstaining. This has deepened the rift between Aave Labs and the DAO, with critics accusing Kulechov of attempting to influence the vote with his $10 million-plus token purchase.
The AAVE price has fallen by about 20% amid criticism of Kulechov’s token purchase and concerns about governance “attacks” and fee distribution. The conflict has raised important questions about the relationship between Aave Labs and $AAVE token holders, with Kulechov acknowledging that the explanations provided have been inadequate and promising improvements in the future.
Market Impact and Governance Risks
The recent DAO vote has ended, and the market is pricing in governance risks. AAVE has lost about 20% of its value over the past week, with sharp wicks between $5 and $7 as liquidity declines above $155. Aggressive sellers continue to bet on a bounce, with one whale moving over 230,000 AAVE – about $37 million at the time – in a single selling session.
Kulechov has rejected criticism of his token purchase, stating that the tokens were not used to vote on the recent proposal and that his intention was to support his beliefs with his own means. However, the ARFC to transfer brand assets has become a lightning rod, with governance administrators and major delegates calling the holiday date a “hostile” move.
Future Outlook and Roadmap
Kulechov has promised a clearer roadmap, outlining how the products developed by Aave Labs create value for the DAO and $AAVE token holders. The next phase of communication will focus on closer alignment between core development and token holder economics, rather than hasty votes during holiday trading lulls. However, the burden of proof has shifted, and Aave’s governance experiment is currently underway, with the market eagerly watching the next snapshot.
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