Event Overview

Recently, the governance controversy surrounding the leading DeFi protocol Aave and the deep correction of AI concept cryptocurrencies have formed two key clues in the same round of market fluctuations. On one side is the governance proposal concerning Aave's brand and front-end control, which has sparked intense disagreements, including from Wintermute and some community members; on the other side, the AI-themed token sector has entered a deep adjustment after an initial frenzy. Public data shows that, according to a report by CryptoPresales, AI tokens have experienced a cumulative decline of about 75% throughout 2025, with the total market value of the sector shrinking by approximately $53 billion. The eight major AI tokens tracked in the report have all recorded annual declines exceeding 70%, exhibiting clear characteristics of sector-wide retracement. Within the same time frame, the governance debate over Aave and the valuation compression of the AI sector point to a question worth exploring: do the current governance mechanism disagreements in the crypto market and the retreat of thematic sectors reflect a deeper structural adjustment—namely, after the narrative fades, does capital refocus on the underlying logic of "who holds power, who shares profits, and how value is captured"?

Aave Governance Controversy

The latest governance controversy surrounding Aave focuses on a proposal regarding the brand and front-end control: the proposal aims to establish or adjust the entity structure responsible for the Aave brand and front-end interface. However, according to existing public information, the proposal does not provide sufficiently clear explanations regarding the governance structure of this entity, its boundaries of responsibility, and how it connects with existing decentralized governance. This directly affects AAVE token holders' expectations regarding the value capture path. Evgeny Gaevoy, founder and CEO of Wintermute, publicly stated that the proposal "lacks a clear explanation of the governance structure for the front-end and brand control entity, making it difficult to ensure AAVE token value capture." He believes that if the brand and user entry are controlled by a single entity without transparent governance constraints, the growth benefits of the protocol may become disconnected from the interests of token holders. Since 2022, Wintermute has invested in AAVE and continuously participated in its governance, accumulating substantial influence through multiple rounds of proposal voting and liquidity support, making its opposition to this proposal particularly significant. In the tug-of-war between decentralization and control, who holds the brand and front-end, and who supervises them, can easily escalate into a debate concerning the soul of the protocol. This is why a technical and structural proposal quickly evolved into widespread conflict within the Aave community.

Power and Value

In the practical operation of DeFi protocols, the brand and front-end control entities often wield more direct governance influence and profit distribution rights than on-chain parameters. User perceptions are mostly tied to "the official website of a certain protocol" or "the page of a certain app," which means that the party controlling the front-end and brand inherently has dominance over traffic, fee paths, and default interaction methods. For tokens, the key to designing a value capture mechanism lies in whether the fees generated by the protocol, liquidation profits, or other cash flows can stably return to token holders through mechanisms such as token staking rewards, buybacks and burns, or governance dividends; at the same time, whether governance rights (such as parameter adjustments, asset listings, and risk model changes) are linked to token weight, allowing tokens to serve as equity certificates for protocol growth. The current controversy surrounding Aave arises precisely because the proposal lacks a transparent and binding governance structure explanation for the entity responsible for the brand and front-end, thereby weakening the market's expectations of the AAVE token as a "value anchoring vehicle": if the profits and decisions related to the brand and entry are controlled by a relatively independent entity, and token holders find it difficult to effectively check this entity, then the benefits of protocol expansion may be more concentrated in that entity rather than in the tokens themselves. In a broader DeFi context, this tension is not uncommon: on one hand, projects loudly proclaim decentralization at the narrative level, while on the other hand, key control is concentrated in the hands of a few companies or foundations, leading to structural tension between governance tokens and actual control.

AI Token Data Perspective

Almost simultaneously amplified with the governance contradictions of Aave is the collective deep correction of AI concept cryptocurrencies in 2025. According to the annual report released by CryptoPresales, the AI-themed token sector has experienced a cumulative decline of about 75% throughout 2025, with the total market value shrinking by approximately $53 billion from its peak, indicating that the previous valuation bubble driven by the "AI + blockchain" narrative is being rapidly deflated. The report also points out that the eight major AI tokens it tracks have all recorded declines exceeding 70% within the year, with some assets experiencing even larger pullbacks. This distribution characteristic indicates that the current adjustment is not caused by the deterioration of individual project fundamentals, but rather a typical sector-wide, systemic repricing. Compared to the phase in 2024 when the AI narrative was highly sought after in the secondary market, related assets had recorded several-fold increases in a short period, with trading volume and social discussion heat soaring simultaneously. The approximately 75% correction in 2025 constitutes a typical "mean reversion": when expectations and valuations significantly outpace real progress, the market often completes a switch to a more reasonable range through rapid declines during periods of liquidity and risk appetite contraction. It is important to emphasize that the above data comes from public reports and multi-source cross-verification; this article does not make further inferences about undisclosed individual project data.

Sentiment and Structure

In interpreting the correction of AI concept tokens, PANews' viewpoint is somewhat representative: the sharp drop and continued pressure on AI sector prices largely stem from a cooling of market sentiment and insufficient liquidity supply. High Beta narrative assets often face difficulties in turnover and valuation discounts during periods of declining risk appetite—capital is more willing to flow back to leading blue-chip or stable income assets, amplifying the pricing elasticity of thematic and story-driven tokens. In terms of trading structure, AI tokens previously relied heavily on short-term capital and leveraged trading; during the upward phase, capital could quickly amplify profits, but once the narrative cools and transaction density decreases, the reflexive effect can also magnify the decline. In terms of capital structure, the lack of long-term fundamental capital support can make prices more susceptible to "step-like" declines. From an industry perspective, the current AI token crash is acting as a reshuffle: projects that purely rely on the "AI concept" are facing survival tests, while those that can continuously deliver in computing power, data resources, model capabilities, or on-chain practical applications are likely to regain valuation premiums after the correction. Meanwhile, adjustments in industrial policies from places like China are seen by the market as signals of a new phase in global technological competition, which may shape the demand framework for AI and computing-related assets in the medium to long term. However, these macro variables are currently still primarily based on single and limited sources, making it difficult to draw excessive inferences.

Connections and Insights

By juxtaposing the governance rift of Aave with the retreat of AI tokens, we can see a common cause beneath their apparent differences: after the narrative halo fades and the funding environment tightens, the market's tolerance for "who controls the protocol and how value flows to tokens" significantly decreases. For DeFi protocols, the ownership of brand and front-end control, supervision mechanisms, and whether they are embedded in an on-chain governance framework are becoming important variables in the valuation system; for high-volatility thematic sectors like AI, if tokens cannot establish a stable binding with the protocol's real cash flows or usage demands, their discount during liquidity retreats is often greater. In the new cycle, the roles of institutional participants like Wintermute are also shifting: they are not only market makers or liquidity providers but are also deeply involved in governance and shaping the rules through holdings and voting rights, becoming "institutional participants." This means that for participants in DeFi and various thematic sectors, the research framework needs to shift from merely focusing on technical narratives and short-term catalysts to structural dimensions: governance clarity (whether rules are transparent and responsibilities are balanced), value capture paths (how tokens share in protocol growth), and the current market cycle position (liquidity expansion or contraction) should all become core coordinates for assessment and decision-making.

Outlook and Risk Control

At the current stage, whether it is Aave's governance contradictions surrounding brand and front-end control or the AI sector's deep correction of about 75% throughout the year, both are more about paying the price for previous overheating expansions and pushing the market back to considerations of "fundamentals and mechanism design." Key observations moving forward include whether Aave will strengthen its governance structure after community negotiations—such as further clarifying how the entity responsible for the brand and front-end will accept on-chain governance constraints and how to connect profits with token rights; on the other hand, whether AI-related projects can present verifiable real income, user growth, and technological moats after a new round of valuation repricing to support more sustainable pricing. For investors, this round of adjustments serves as a reminder to be cautious of chasing highs based on single narratives or emotional drives: when entering any DeFi or thematic sector, one should systematically examine governance terms, token economic models (fee distribution, unlocking rhythm, governance weight), and the current liquidity environment. In the face of information that has not been verified by multiple parties and conclusions from single sources, it is necessary to maintain methodological caution, treating multi-source data cross-verification as a research norm rather than an optional additional step.

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