Aave’s internal strife pits DAO ideals against corporate control

The battle for control of Aave, the $52 billion decentralized lending giant, has escalated from a debate over interface economics into an open civil war regarding governance legitimacy.

What began as a dispute over $10 million in annualized swap fees and brand ownership has, in the last 24 hours, mutated into a bitter procedural fight between the protocol’s decentralized autonomous organization (DAO) and its development arm, Aave Labs (also known as Avara).

At the center of the storm is a Snapshot vote scheduled to run from Dec. 22 through Dec. 26. The ballot proposes transferring Aave’s “soft assets”, including its trademarks, domain, and social handles, from Aave Labs to the DAO.

However, the mechanism of the vote itself has triggered a crisis. The proposal was pushed to the ballot not by its author, but by the very entity it seeks to regulate: Aave Labs.

This has forced the industry to choose between two competing visions of the future: the democratic idealism of the DAO, or the ruthless efficiency of the corporate entity that built the throne.

The outcome will determine not only who controls the protocol’s URL but also whether a decentralized collective can effectively run a multibillion-dollar software business.

‘Disgraceful’ tactics and hijacked proposals

The chaos began when the “ARFC: Token Alignment” proposal appeared on Snapshot.

While the author listed was Ernesto Boado, co-founder of BGD Labs (a key service provider for the protocol), Boado immediately disavowed the action, claiming his identity was used without consent to force a premature vote.

In a sharply worded rebuke, Boado stated:

Boado, who is widely respected for his technical contributions to the Aave protocol, framed the move as a violation of governance norms. He said:

Meanwhile, the vote’s acceleration has also drawn sharp rebukes from governance stewards like Marc Zeller, founder of the Aave Chan Initiative.

Zeller described the maneuver as a “hostile takeover attempt,” noting that it was timed during the holiday season—a notoriously low-participation window for institutional voters—and snapshotted before the opposition could mobilize.

He pointed out:

However, Aave Labs and its founder, Stani Kulechov, have defended the move as a necessary acceleration of a stalled governance process.

Kulechov stated that the community has shown significant interest in the proposal discussion and has, thus, it was “time for tokenholders to weigh in and vote.”

He also dismissed the procedural complaints, arguing that five days of forum debate were sufficient and that the community was fatigued.

He wrote:

The case against ‘pure’ decentralization

While delegates focus on procedural fouls, a growing chorus of industry veterans is rallying to defend Aave Labs, arguing that the DAO’s push for “ownership” is a fundamental misunderstanding of why Aave succeeded in the first place.

Nader Dabit, the director of developer relations at EigenLayer, offered a blistering critique of the proposal, reframing the narrative from one of liberation to one of self-sabotage.

He said:

Dabit’s argument strikes at the uncomfortable truth of the DeFi sector: despite the rhetoric of decentralization, market dominance is almost always the result of centralized execution.

He argued that Aave would have been outcompeted several years ago if it had been run exclusively by the DAO. He noted:

The core of this defense is operational reality. Building world-class software is difficult; building it by committee is nearly impossible.

Dabit furthered that DAOs are “incapable of shipping competitive software, or even being competitive at anything attempting to resemble an actual, real business.” This is because every decision would require a governance proposal, which would result in “every fast-moving opportunity [dying] in a forum thread while competitors are actually executing.”

Dabit also posited that by stripping the company of its assets and revenue streams, the DAO will destroy the incentive structure that keeps the talent locked in. He warned:

This view suggests that the $10 million in annualized interface revenue that the DAO is fighting to capture, which is money currently flowing to Aave Labs via swap routing fees, is the price of competence. It is the R&D budget that keeps the engineers employed and the product shipping.

The $52 billion gamble

As the vote proceeds over the Christmas holiday, the stakes are far higher than the specific bylaws of the “Token Alignment” proposal. The market is watching to see if Aave will cannibalize its own growth engine in the name of ideological purity.

The DAO’s argument is legally and ethically sound: the protocol creates value, so it should own the brand. The $10 million in revenue leaking through the interface belongs to token holders. If Aave Labs wants to run a business, it should do so as a service provider, not a landlord.

However, the counter-argument is pragmatic and financially lethal. Aave arrived at a “natural, high-functioning equilibrium” over the years, resulting in a 60% market share of all crypto lending.

Uprooting that arrangement to solve a philosophical dispute over “ownership” risks introducing friction into a machine that is currently printing money.

If the measure passes, the DAO must prove it can manage the complexities of trademarks, legal wrappers, and software monetization without a CEO’s unified vision. If it fails, the community must accept that in the world of high-finance crypto, “decentralization” has a limit, and that limit is the front door.

For now, all the issues have caused AAVE’s price to waver. According to CryptoSlate’s data, the digital asset is down around 20% over the past week, trading at $157 as of press time.