DAO–Labs dispute hit AAVE’s price, not its core – Here’s why

Aave [AAVE] has been in the spotlight lately, and not entirely for price gains.

A public clash between its DAO and Labs has spooked the market lately. But there’s more to this than you think, and it may matter more than the headlines suggest.

A sentiment reset

Aave’s price took a hit in December, with a public dispute between the DAO and Aave Labs shaking confidence. This has wiped roughly $500 million off its market cap, per Santiment.

Price slid while negative sentiment spiked, but that mood didn’t last. As January began, sentiment turned. Positive mentions started to outweigh the negative ones, just as the market stopped making lower lows.

Perhaps traders are reacting more to signs that both sides are moving toward a resolution. While price hasn’t fully caught up yet, it looks like the worst of the uncertainty may already be priced in.

The numbers don’t lie

Spikes in daily active addresses and short bursts of network growth appeared right around AAVE’s local price lows in late December. Activity stayed steady and at times even picked up.

Circulation increased during the market dips, indicating that tokens were being actively repositioned. 

Since the beginning of January, prices have trended higher, supported by strong buying activity in the background. While headlines highlighted governance drama, the network itself continued to operate without disruption.

The foundations never really broke