CoinW Research Institute
Recently, the Aave community has experienced governance disputes regarding the attribution of front-end commercialization revenue, triggering a re-discussion on governance structure and business boundaries. In this round of governance disputes, the development entity Aave Labs integrated CoW Swap into the application front end, causing the new fees generated from related transactions to flow directly to an address controlled by Labs. This has led to community disputes over revenue transparency, brand asset attribution, and governance boundaries. In response to this issue, the community formally proposed an ARFC proposal, with the core demand being to clarify the governance attribution of Aave brand assets, requiring the unified transfer of related intangible assets, including domain names, social media accounts, and brands, to DAO management. Currently, the proposal has entered the Snapshot voting phase, with the voting window set from December 23 to December 26, 2025. Current voting results show approximately 494,800 votes against, accounting for 64.15%. From the phased voting structure, there is still a significant divergence within the community regarding the direct transfer of brand assets to DAO control. The final outcome of this governance process will have a significant impact on how Aave establishes a stable balance mechanism between core development team incentives, brand control, and the long-term interests of token holders.

1. Project Introduction

Aave is one of the largest and most mature decentralized lending protocols currently available. After years of iteration, Aave's TVL has exceeded $33 billion, occupying about 60% of the DeFi lending market. Its core value lies not in a single lending product but in building a non-custodial, permissionless on-chain liquidity market. On December 2025, the U.S. SEC officially concluded its years-long investigation into Aave without taking enforcement action, alleviating compliance uncertainties and promoting Aave's development from a DeFi protocol primarily serving crypto-native users to a more compatible on-chain financial infrastructure, creating a positive demonstration effect on the overall compliance expectations of DeFi. Aave founder Stani Kulechov recently established his three major strategies for 2026: first, the comprehensive rollout of Aave V4, which aims to unify cross-chain liquidity through a Hub-Spoke architecture, breaking down funding barriers between different public chains; second, the scaled expansion of Horizon RWA, which currently has net deposits of $550 million, planning to introduce global asset classes such as U.S. Treasury bonds, ETFs, and commodities on-chain through partnerships with institutions like Circle, Ripple, and Franklin Templeton, targeting a scale of over $1 billion by 2026; third, the comprehensive promotion of the Aave App, aiming to transform complex lending operations into a mobile savings application.

2. Market Dynamics

Currently, there is a significant divergence in the Aave community's ARFC governance proposal, which has quickly attracted market attention. This proposal was put forward by the former CTO of Aave Labs and current co-founder of BGD Labs, aiming to systematically clarify the governance attribution of Aave protocol's intangible assets, requiring the unified inclusion of core assets such as domain names, official social media accounts, code repositories, and the "Aave" brand naming rights under Aave DAO management. The direct background of this proposal is the community's questioning of the arrangement regarding certain protocol fees and brand asset control rights, which were not authorized by the DAO, leading to the failure of the protocol's commercialization revenue to effectively benefit the token system, viewed by some holders as weakening the value of the AAVE token. This issue has sparked ongoing discussions in the governance forum. On December 22, with community discussions still ongoing, the proposal was directly pushed to Snapshot for off-chain voting, with the voting period set from December 23 to December 26. Due to the voting window coinciding with the Christmas holiday, several governance participants raised objections to the process arrangement, believing it could affect token holder participation and the quality of governance discussions.
From the current voting progress and market feedback, this governance event has had a substantial impact on short-term sentiment. As of now, there are approximately 494,800 votes against, accounting for 64.15%; abstentions are about 253,400 votes, accounting for 32.85%; and supporting votes are about 23,200 votes, accounting for 3.01%, indicating significant divergence within the community regarding whether brand assets should be directly transferred to DAO control. During the voting process, there were also clear risk response actions on-chain. On December 22, a long-term holder of AAVE, a large on-chain whale address, sold off 230,000 AAVE in batches and converted the funds into stETH and WBTC, causing the AAVE price to drop about 10% in a short period, reaching a low of $156. However, the market generally interprets this sell-off as a phase of risk aversion to governance uncertainties rather than a denial of the Aave protocol's fundamentals or long-term competitiveness.

3. Team Background

Aave originated in 2017, and its founder and CEO Stani Kulechov is one of the early entrepreneurs systematically building on-chain financial infrastructure in the DeFi space. Stani has extensive entrepreneurial experience in the crypto and fintech fields and has been actively involved in DeFi ecosystem development. At several key points, he has elaborated on the long-term positioning and development direction of the protocol, including V4 architecture upgrades, institutional-level lending capability development, RWA integration directions, and application layer layouts aimed at a broader user base.
On the execution side, the protocol's technical research and product advancement are primarily undertaken by Aave Labs, which is responsible for the development, upgrading, testing, and ecological expansion of core contracts, emphasizing open-source, modularity, and composability in its design philosophy. At the same time, Aave's governance and strategic direction are not unilaterally decided by Labs but are coordinated and adjudicated by Aave DAO as the governance body through on-chain and off-chain governance processes. Aave DAO is composed of token holders and is responsible for voting on major parameter adjustments, fund usage, protocol upgrade directions, and brand-related matters. Regarding the division of labor and boundaries of responsibility between Aave DAO, Aave Labs, and the broader community, the protocol has formed an operational framework with DAO as the governance body and Aave Labs as the execution body, while the recent ARFC proposal is a governance discussion centered around certain asset and authorization issues within this framework.

4. Token Information

Aave's native token AAVE has a total supply of 16 million tokens, with approximately 15.19 million currently in circulation, and the circulation ratio is close to the upper limit, with limited new inflation space, resulting in a relatively stable token supply structure. In this context, the value of AAVE depends more on its functional positioning in governance, risk-bearing, and protocol cash flow distribution. In terms of governance, AAVE is the core governance token of Aave DAO, allowing holders to participate in proposal discussions and votes, including ARFC; in terms of risk and reward mechanisms, AAVE undertakes the protocol's systemic risk functions through a security module. According to the latest development direction, Aave is advancing the Umbrella module upgrade, introducing a more refined risk pricing mechanism, allowing stakers to share interest or fee income from V4 architecture and RWA-related businesses while providing security backing for the protocol. Additionally, in terms of value capture, Aave has begun to regularly implement a "buy and distribute" strategy, where the protocol uses part of the net income generated from lending activities to repurchase AAVE in the secondary market and distribute it to protocol contributors and staking participants, establishing a more direct linkage between token value and the protocol's real cash flow.

5. Competitive Landscape

Aave has long been regarded as one of the representative protocols in the DeFi space with a relatively mature governance structure and high execution efficiency. However, as the protocol's scale, brand influence, and commercialization needs continue to expand, the organizational complexity borne by its governance framework has increased, and the original model has gradually revealed structural tensions. On one hand, the protocol's value highly depends on the consensus foundation formed by the DAO community, TVL, and network effects; on the other hand, important matters such as front-end operations, product iterations, compliance exploration, and institutional collaborations still heavily rely on the centralized decision-making and execution capabilities of specialized teams at critical nodes. This structure, which coexists decentralized governance with centralized execution, poses higher demands on the existing boundaries of rights and responsibilities as the protocol enters a mature stage. However, from the current governance voting results, opposition opinions dominate, and abstentions account for 32.85%, indicating that the community does not fully agree with making a one-time, structural adjustment to front-end commercialization revenue and brand asset attribution through a relatively hasty governance approach.
From a competitive landscape perspective, the current governance dispute at Aave contrasts with Uniswap's recent governance progress regarding protocol revenue and token value capture mechanisms. Uniswap has advanced the activation of the protocol fee switch through the UNIfication proposal, which, once approved by DAO voting, will redirect part of the transaction fees back into the protocol system for continuous burning of UNI tokens, along with a one-time treasury token burn. This mechanism establishes a direct correlation between the economic value of UNI and the actual trading volume and fee income of the Uniswap protocol, with the related fee ratios, burn paths, and execution methods all maintained through governance processes, ensuring consistency of interests between the team and the community. From a more fundamental perspective, this is not an isolated event but rather a different solution to token economics and protocol management among leading DeFi protocols at the scaling stage. If Aave can establish similarly clear, executable, and institutionally binding governance and revenue arrangements in the current game, its competitive advantage is expected to be further consolidated; conversely, if governance divergences remain in a state of unclear rights and responsibilities for an extended period, even if it maintains a lead in technology and liquidity, the uncertainties at the organizational and institutional levels may gradually translate into competitive disadvantages.