The Aave community has recently seen a high percentage of opposition surrounding an ARFC governance proposal, with on-chain statistics indicating that approximately 64.15% of votes were against it. Additionally, market monitoring suggests that around several hundred thousand AAVE tokens were concentratedly sold off, leading to a nearly 10% drop in price within a single day. In the Philippines, according to public information, the central bank and the national telecommunications regulatory authority have collaborated to implement access bans on about 50 unlicensed cryptocurrency trading platforms, including some internationally recognized platforms. Two lines of development that were originally parallel on-chain and off-chain have converged into a "systemic stress test" within the same time window, reflecting that the current market valuation focus is shifting from technology and narrative to governance quality and compliance pathways.
Core of the Event
Around December 24, 2025, Beijing time, Aave DAO voted on an ARFC proposal related to the commercialization of the protocol's front end and revenue distribution. According to on-chain data compiled by the community, the opposition ratio was about 64.15%, indicating a significant degree of governance divergence. As a result, market monitoring data pointed to a single or a few large addresses collectively selling off around several hundred thousand AAVE during the critical voting phase, leading to a daily drop of about 10%, amplifying the price sensitivity of the event.
Almost simultaneously, the Central Bank of the Philippines (BSP) and the National Telecommunications Commission (NTC) took joint action, publicly announcing access bans on about 50 unregistered and unlicensed cryptocurrency trading platforms, including well-known platforms like Coinbase and Gemini. One is the governance impact on a leading on-chain lending platform, and the other is the concentrated ban on cross-border platforms in an emerging market; these two events together have changed the way some funds price the risks associated with DeFi protocols and centralized trading platforms.
Incentive Analysis
From the information perspective, Aave's ARFC proposal revolves around a new version of the old question: "How should cash flow from front-end commercialization be distributed among the protocol treasury, operating entities, and token holders?" In public discussions, different token holders have shown clear divergence on issues such as "whether to enhance token yield rights" and "whether this will exacerbate securities-like risks," which is concentrated in the high percentage of opposing votes. For funds, a more critical point is that this vote has been interpreted by some participants as indicating "unstable governance expectations," leading them to choose to reduce their holdings or remain on the sidelines.
Regarding the Philippine regulatory aspect, the incentives mainly stem from cumulative changes in the regulatory framework and policy direction. Previously, the country's regulatory authorities had raised compliance concerns and risk warnings about certain large platforms, and now they have shifted to a unified stance of "unlicensed platforms." With the support of the central bank's financial regulation and the technical capabilities of telecommunications regulatory agencies, they are promoting the return of local business to entities that have obtained registration and licenses through access bans. According to regulatory observers, this means that the Philippines is gradually moving from a "de facto tolerance" of cryptocurrency businesses to a stage of list-based management defined by licensing boundaries.
On the emotional level, the governance controversy surrounding Aave, combined with price corrections, has led to a re-examination of the valuation logic of "token = governance rights"; meanwhile, the Philippines' ban measures have intensified users' concerns about regulatory uncertainty in certain regions, amplifying their risk aversion towards unlicensed platforms.
Deep Logic
At a deeper structural level, the commonality between the Aave and Philippine events points to "institutional arrangements themselves" becoming a key variable in the next stage. According to some third-party statistics, Aave's current total locked value is in the hundreds of billions of dollars, dominating the decentralized lending market. Its V4 version's planned cross-chain architecture and real-world asset (RWA) expansion goals are seen as important levers for protocol growth around 2026. Such expansion essentially requires the protocol to connect with real-world asset partners across more public chains and jurisdictions, raising higher demands for its governance stability and predictability.
If a protocol with a systemic position in the DeFi lending space struggles to form a clear consensus on rules regarding key revenue distribution issues over the long term, potential RWA partners and traditional financial institutions may apply higher discounts in their risk assessments. This is why, despite being a governance vote, the market amplifies its price impact, viewing it as a stress test of DAO governance maturity rather than a simple parameter adjustment.
The logic of Philippine regulation is closer to "external institutional reshaping." In mature markets like the United States, cryptocurrency-related institutions often face regulatory investigations, information disclosure requirements, and delineation of boundaries with securities and commodities regulations. Recent public information indicates that investigations by U.S. securities regulators into certain DeFi protocols are nearing a phase of conclusion, reflecting a regulatory path of "drawing lines through investigations." In contrast, emerging markets like the Philippines rely more on licenses and admission lists as "veto tools," supplemented by technical access restrictions to quickly reorganize the landscape of domestic cryptocurrency businesses. Both paths attempt to re-embed cross-border, on-chain businesses into the legal structures of their own countries or systems, albeit with different toolkits and rhythms.
On-chain data and macro indicators are also signaling changes in the environment. Some Bitcoin cycle monitoring indicators (such as BCMI) show that the current cycle's risk appetite and liquidity are at relatively low levels, suggesting that the market may be entering a more prolonged, structural adjustment phase. In such an environment, tolerance for governance uncertainty and regulatory uncertainty naturally decreases, making funds more likely to react disproportionately to negative signals at the institutional level.
Bull-Bear Game
Surrounding the Aave and Philippine events, market opinions are clearly divided. Supporters of Aave's long-term value emphasize that, according to on-chain voting records, this controversy reflects that the governance mechanism "is functioning," meaning that different stakeholders are expressing their positions through public voting rather than behind-the-scenes manipulation. At the same time, the protocol still maintains a locked value of hundreds of billions of dollars and a high level of lending activity, indicating that its dominant position in the DeFi lending space has not been fundamentally shaken. In their view, the short-term whale sell-off and around 10% price fluctuation represent a "re-pricing" of governance expectations, providing long-term participants with an opportunity to acquire governance rights at a discount.
The bearish side, however, focuses more on institutional flaws. They cite market analysts who argue that AAVE's sensitive price reaction to this governance controversy highlights the "institutional gap between governance rights and cash flow distribution": token holders nominally possess governance rights, but have limited say in actual revenue distribution. If the allocation of front-end commercialization profits does not align with the expectations of some token holders, it could trigger a rapid price decline. From this perspective, a single 10% drop is not the core issue; rather, every large vote involving profit distribution in the future will be viewed by the market as a potential volatility trigger, raising the governance risk premium. The core judgment of the bears is: if the structure of "token = governance rights ≠ stable cash flow" does not change in the long term, governance tokens like AAVE will struggle to achieve valuation anchors similar to traditional equity.
In the Philippine regulatory event, the bullish perspective believes that this move is expected to enhance local user protection levels, promoting funds to concentrate on compliant, licensed platforms, thereby improving the overall risk structure of the country and even the regional market in the medium to long term, which would be beneficial for international platforms genuinely willing to focus on compliance. The bears, on the other hand, worry that large-scale bans in the short term will force some users to turn to harder-to-regulate gray channels or use offshore tools to bypass restrictions, thereby increasing systemic risk. Additionally, restrictions on international leading platforms' local operations may weaken local users' access to global liquidity, raising transaction and cross-border remittance costs.
This divergence between bulls and bears further radiates to other sectors and regions. On one hand, governance tokens of other DeFi protocols may be preemptively discounted when facing similar issues of "front-end profit distribution" and "whether tokens should enjoy dividends." On the other hand, users in emerging markets like Southeast Asia and Latin America are beginning to pay more attention to the licensing status of trading platforms, with some platforms that have not obtained local licenses facing potential liquidity outflow risks.
Outlook: Repricing from Narrative to Institution
Against the backdrop of some macro indicators suggesting that Bitcoin and broader cryptocurrency assets are in a relatively weak cycle, these two events point to an important turning point: market driving forces are shifting from "growth narratives" to "institutional premiums." In past bull market phases, metrics like TVL growth curves, cross-chain expansion speeds, and new public chain TPS were the main stories driving valuations; whereas in the current phase, the visibility of cash flow, clarity of governance structures, and stability of compliance pathways are becoming new core factors.
For investors, several key observation points need to be monitored in the short term. First, whether Aave DAO will provide clearer and repeatable institutional arrangements regarding front-end commercialization and revenue distribution, rather than a one-time compromise; the voting participation rate and proposal approval thresholds will directly impact the market's pricing of its "governance maturity." Second, whether the Philippine regulatory path will form a relatively stable licensing framework and whitelist mechanism after this ban, or enter a state of frequent adjustments, will influence regional funds' long-term judgments on local policy risks. Third, whether other countries and regions will observe and partially replicate the Philippines' combination of technical bans and licensing management, thereby pushing unlicensed platforms to face similar pressures in more markets.
From an operational perspective, when evaluating DeFi projects, in addition to TVL and interest rate curves, it is essential to closely examine their DAO structures: whether the ownership relationship between tokens and cash flow is transparent; whether there are independent commercialization arrangements at the front end; and whether there are historical voting records of key proposals that repeatedly show high percentages of dissent. When assessing centralized platforms, in addition to brand and depth, it is necessary to include "whether they hold licenses for the target market" and "whether there is a public timeline for compliance routes" in the fundamental analysis to distinguish between short-term emotional regulatory events and long-term structural regulatory shifts.
In a potentially more prolonged adjustment cycle, those protocols and platforms with predictable governance rules and clear compliance pathways are more likely to gain "institutional premiums" in valuation reassessments, rather than relying solely on narrative premiums to drive prices.
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