Recently, a controversy surrounding Aave founder Stani Kulechov's significant increase in AAVE holdings and participation in key governance proposals has brought the old issues of DeFi governance back to the forefront. Market reports indicate that Stani has accumulated approximately $10 million in AAVE on the secondary market (from a single source, pending further cross-verification), and subsequently participated in a governance proposal vote related to the control of Aave brand-related assets, sparking sharply contrasting views on "governance manipulation" and "process compliance." This article will deliberately avoid unverified transaction and price details, focusing instead on a relatively certain core data point—according to TechFlowDaily, the top three voting parties in the Aave DAO collectively hold about 58% of the voting power, and will analyze the structural risks of token-weighted governance.
On December 24, 2025, UTC+8, this controversy erupted on social media and community forums, with a criticism stating, "This is a typical case of governance manipulation," contrasting sharply with the response, "All processes comply with the governance framework." The incompleteness of key information—including the scale of the increase being only an estimated range and the precise timeline of voting and discussions still being organized—amplified emotional noise and turned this incident into a case study for re-examining DAO governance structures.
Core of the Incident
In the latest round of discussions about Aave governance, there are three core facts: First, Aave founder Stani has been disclosed by market researchers to have recently made a significant purchase of AAVE on the open market, amounting to approximately $10 million; second, a governance proposal involving the transfer of control over Aave brand-related assets has entered the voting process, with results having substantial implications for the future ownership and usage rights of the protocol's brand; third, Stani, as a key stakeholder, participated in this governance vote. Based on these facts, two highly opposing narratives began to emerge in the community: critics linked "increased holdings + voting + sensitive proposal" as a chain of suspected governance manipulation, while Stani's side emphasized "strict adherence to existing governance rules and processes throughout."
Chronologically, the market's focus on the increase in holdings clearly came after the discussion of the governance proposal itself had heated up, leading many retrospective analyses to carry a strong "hindsight bias." As there are currently no publicly available, authoritative channels disclosing precise purchase amounts, batch transaction details, and price trajectories before and after voting, the community can only make range extrapolations based on partial on-chain monitoring reports and exchange depth data. To control information risk, this article does not cite any specific transaction details that lack complete verification, but instead shifts the analytical focus to the governance structure and power distribution that can be independently verified.
Perspective Breakdown
Supporters of Stani focus on the "rules aspect": within the established Aave governance framework, any address holding AAVE has corresponding voting rights, and the founder has not been excluded. As long as the voting process is executed through the established platform and contracts, without skipping discussions or bypassing legal procedures, then from the perspective of "procedural justice," this is a legitimate and compliant governance participation. The implicit premise of this camp is that, under the premise that the code and charter are already fixed, subsequently requiring a certain type of address to "exercise restraint" based on identity or public opinion standards would undermine the predictability of governance rules.
Opponents emphasize "substantive fairness" and "conflict of interest avoidance." In their view, when a proposal directly targets brand assets, trademarks, or IP with long-term economic value, related parties (including founders, core teams, and their associated entities) should proactively reduce their voting power or abstain; otherwise, even if it is formally legal, it would create the appearance of "voting for oneself." Behind this opinion is a concern about the concentration of power within the Aave DAO: according to TechFlowDaily data, the top three voting parties hold about 58% of the voting power, and if any of these addresses are linked to the founder or their close interest circle, community suspicion of "compliance but improper" will naturally rise.
From the perspective of interest structure, the two sides actually represent two different expectations of DAOs: one side values the stability of rules and the enthusiasm of founders/large holders, believing that their high holdings mean a strong binding to the project's success or failure; the other side views DAOs as quasi-political entities that require "separation of powers," demanding a strict structural distinction between decision-makers and beneficiaries. This tension inevitably erupts under a one-token-one-vote mechanism.
Interwoven Narratives
If we extend the timeline, the recent Aave controversy is not an isolated case, but rather the result of multiple narratives overlapping within the same time window.
First, there is the long-standing tension between the role of the founder and DAO autonomy. In the early stages of a project, founders and core teams often bear the majority of the R&D, business, and security responsibilities, and the community is willing to accept their "strong leadership"; however, as the protocol matures and the user and external holder base expands, scrutiny over "whether the founder holds all the power" intensifies. Stani's increase in AAVE is seen by supporters as "continuing to bind the project with real money," while critics view it as "reinforcing personal control over the protocol," with the same action having completely different meanings in different contexts. The proposal for the transfer of brand asset control happens to lie at the intersection of this contradiction, making the conflicts between technical governance and corporate governance, economic rights and discourse power manifest in the same vote.
Second, there is the intertwining of token governance tools and secondary market trading behavior. AAVE serves both as a governance tool and a freely tradable asset; as long as market liquidity allows, anyone can build a large position in a short time, thereby gaining significant voting power. This presents an opportunity for external arbitrageurs and acts as a "power amplifier" for internal related parties. In this incident, the sequence of "first increasing holdings, then voting" has been highly amplified in public opinion, exposing the reality that the current mechanism imposes no additional constraints on "temporary positions built before voting."
Third, there is the resonance of emotions in an environment of incomplete information. Key data such as the precise voting route, specific buying rhythm, and the underlying legal structure of brand assets have not been fully disclosed or systematically organized, leading to rapid fragmentation in community discussions labeled as "attack/manipulation" and "insider/whale." For the DeFi sector, which heavily relies on on-chain transparent narratives, this "information deficiency + emotional precedence" model directly undermines market trust in governance.
Deep Game
To understand the essence of this conflict, we need to return to the foundational level of the one-token-one-vote system. The most common defense logic for token-weighted governance is that the larger the holding, the deeper the interest binding, thus their votes are more motivated to maintain the long-term value of the protocol. However, this logic often leads to two extremes in reality: either large holders dominate long-term, allowing most proposals to be decided in the "rooms of a few," or it triggers strong public sentiment about "whales enriching themselves" at critical moments.
In the case of Aave, according to TechFlowDaily, the top three voting parties hold about 58% of the voting power, which means that on the vast majority of proposals, if these three vote in the same direction, the combined efforts of thousands of small addresses are unlikely to change the outcome. When such concentrated voting power overlaps with the founder or their associated ecosystem, the core of the conflict is no longer just "whether to comply with the process," but "who has the actual power of life and death in the system, and whether this power is sufficiently constrained."
This aligns closely with the "mechanism defect" warnings frequently mentioned by Ethereum co-founder Vitalik: if the code only specifies "how to count votes" without adequately designing "who can vote under what circumstances," then the seemingly neutral mechanism will naturally favor large holders. More complex is the accelerated institutionalization of the crypto market in 2025, where wallets from trading platforms, funds, and centralized financial institutions occupy a high proportion in most mainstream DeFi protocols. These wallets may be passive management asset pools or carry clear strategic and game objectives. When institutional identities intersect with the backgrounds of founding teams, traditional corporate governance issues such as "related party transactions" and "major shareholder avoidance" replay in more covert forms within DAOs.
In this sense, the current controversy resembles a game about "code as rules" versus "the power philosophy behind the rules": one side insists that as long as the code does not prohibit it, the behavior should be considered legitimate; the other side emphasizes that even if the code allows it, if there is a lack of accompanying power constraint arrangements, the protocol will statistically repeatedly enter the gray area of "procedurally legal but substantively unfair."
Outlook and Institutional Tools
In the current external regulatory environment, the issue of governance concentration is no longer just an internal "moral theater" within the community. The Hong Kong Securities and Futures Commission has previously expressed concerns about "insufficient information disclosure, opaque rights structures, and the disconnection between governance and actual controllers" in its warnings related to RWA tokens. Although Aave is not an RWA project, the two core questions of "who really calls the shots" and "who ultimately bears the risk" have a high degree of commonality from a regulatory perspective. If a protocol's governance token appears to be decentralized on the surface but is highly concentrated in the hands of a few entities at the voting power level, it may be viewed as having de facto centralized control in future regulatory reviews, which will directly affect the compliance judgments and risk pricing of institutional funds.
Therefore, regardless of how the emotional aspects of this Aave controversy ultimately dissipate, from the perspective of institutional engineering, similar protocols need to more actively construct "pressure relief valves" and "fuses" to leave institutionalized exits for future conflicts, rather than relying entirely on post-event public relations.
The toolbox for consideration roughly includes:
First, voting power limits or diminishing returns. A cap can be set on the effective number of votes for a single address or entity on a single proposal dimension, or a diminishing weight curve can be adopted, meaning that after a certain threshold, new voting power is discounted proportionally. This approach neither deprives large holders of their participation rights nor structurally prevents "one vote deciding everything." Specific parameters can be derived through simulations and community discussions to find a compromise range between "ensuring efficiency" and "curbing centralization," while continuously monitoring the changes in the voting power proportions of the Top 3/Top 5.
Second, related party avoidance and cooling mechanisms. For high-sensitivity proposals involving founder interests, team token unlocks, brand and IP ownership, clauses can be pre-written in governance contracts or process rules stating that "related party addresses must abstain or have delayed effectiveness." For example, when an address is marked as a multi-signature member of the protocol, a foundation trustee, or a core company shareholder, its votes on related proposals can be automatically filtered or delayed. Such mechanisms cannot completely eliminate related risks but can significantly reduce the impact of the perception of "voting for oneself."
Third, delegated governance and representative system optimization. Many DAOs currently support voting power delegation, but in reality, the participation rate of long-tail holders remains low. Aave and similar protocols can establish a transparent, auditable list of "governance representatives," encouraging ordinary users to delegate their voting rights to representative groups with clear expertise in security, economics, and compliance, and regularly assess the voting performance of these representatives. This helps long-tail addresses form a collective with actual influence in the game, rather than being passive spectators.
Fourth, secondary voting and multi-round decision-making. When encountering highly controversial proposals such as brand asset transfers, protocol migrations, or significant adjustments to token economics, mechanisms can be set up to require "two consecutive rounds of voting" or "increased thresholds for secondary confirmations," increasing the time cost for large holders to quickly push through changes. Multi-round voting creates space for information completion and community discussion, while also allowing for a buffer period for regulatory observation and internal compliance assessments.
Fifth, quantifiable indicators of governance quality. Beyond price and TVL, protocols can publicly track and regularly disclose indicators such as "number of effective voting addresses," "average discussion cycle per proposal," and "Top 3/Top 5 voting power proportion range," treating the governance structure itself as an infrastructure that requires continuous optimization, rather than a risk point that is only considered after the fact.
Among these paths, none can retroactively smooth over the rifts caused by the recent Aave controversy, but they can reduce the likelihood of similar events being interpreted as "systemic betrayal" in the future. This may be the reality that DAOs need to face at this stage: shifting from viewing governance as a series of "voting events" to seeing governance as a set of institutional engineering that can be iterated and measured.
Returning to the initial question, Stani's increase in holdings and voting within the regulatory framework is compliant; however, in the eyes of an increasing number of community members who value "substantive fairness," it appears highly sensitive and even improper, and this tension will be continually amplified under a voting power concentration of 58%. In the accelerating institutionalization and rising regulatory scrutiny of 2025, this Aave incident resembles a premature stress test: the subject of the test is not the character of an individual, but the resilience of the one-token-one-vote mechanism in the face of real power structures.
In the foreseeable future, a key variable will be whether DAOs are willing to acknowledge and design the "philosophy of power constraints behind the rules" beyond "code as rules." If the relevant systems can be upgraded, the next similar controversy may be absorbed with lower trust costs; if structural concentration remains unrestrained in the long term, then the gray area of "legitimate but questioned" will continue to be a systemic risk premium that all token governance projects cannot avoid.
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