CoinW Research Institute

Recently, the Aave community has experienced governance disputes regarding the attribution of front-end commercialization revenue, triggering a re-discussion of governance structure and business boundaries. In this round of governance disputes, the development entity Aave Labs integrated CoW Swap into the application front end, resulting in new fees from related transactions flowing directly to an address controlled by Labs. This has sparked community debates over income 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. The proposal has now 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 phase voting structure, there is still a significant divide 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 in the future.

1. Project Introduction

Aave is one of the largest and most mature decentralized lending protocols currently. 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 for crypto-native users to a more compatible on-chain financial infrastructure, creating a positive demonstration effect for overall DeFi compliance expectations. 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 and plans to introduce global asset classes such as U.S. Treasuries, ETFs, and commodities on-chain through partnerships with institutions like Circle, Ripple, and Franklin Templeton, aiming to exceed $1 billion in scale by 2026; third, the comprehensive promotion of the Aave App, dedicated to transforming complex lending operations into a mobile savings application.

2. Market Dynamics

Currently, there is a significant divide in the Aave community regarding the ARFC governance proposal, which has quickly attracted market attention. This proposal was put forward by the former Chief Technology Officer 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 naming rights of the "Aave" brand under Aave DAO management. The direct background of this proposal is the community's questioning of the arrangement of certain protocol fees and brand asset control rights, which were not authorized by the DAO, leading to the protocol's commercialization revenue not effectively benefiting 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, while community discussions had not fully converged, 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%; approximately 253,400 abstentions, accounting for 32.85%; and approximately 23,200 votes in favor, accounting for 3.01%, indicating significant community disagreement on whether brand assets should be directly transferred to DAO control. During the voting process, there were also clear risk response behaviors on-chain. On December 22, a long-term AAVE whale address sold off its holdings of 230,000 AAVE in batches and converted the funds into stETH and WBTC, causing the AAVE price to drop about 10% in a short time, reaching a low of $156. However, the market generally interprets this sell-off as a phase of risk aversion to governance uncertainty rather than a denial of 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 capabilities, RWA integration directions, and application layer layouts aimed at a broader user base.

On the execution level, the protocol's technical research and product advancement are mainly 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. Meanwhile, Aave's governance and strategic direction are not solely determined 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, and the recent proposal of the ARFC 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 nearing its 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 the ARFC; in terms of risk and revenue mechanisms, AAVE bears the systemic risk function of the protocol through a security module. According to the latest development direction, Aave is promoting 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 execute a "buy and distribute" strategy, where the protocol uses part of the net income generated from lending activities to repurchase AAVE on 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 iteration, compliance exploration, and institutional collaboration still heavily rely on the centralized decision-making and execution capabilities of specialized teams at critical nodes. This coexistence of decentralized governance and centralized execution, as the protocol enters a mature stage, raises higher demands for existing boundaries of rights and responsibilities. However, from the results reflected in the current governance voting, 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, Aave's current governance dispute contrasts with Uniswap's recent governance progress on protocol revenue and token value capture mechanisms. Uniswap has advanced the activation of protocol fee switches through the UNIfication proposal, which, after DAO voting approval, will redirect part of the transaction fees back into the protocol system for continuous burning of UNI tokens while simultaneously executing a one-time treasury token burn. This mechanism establishes a direct correlation between the economic value of UNI and the actual trading scale and fee income of the Uniswap protocol, with the relevant 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 by 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 solidified; conversely, if governance disagreements 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 transform into competitive disadvantages.

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