Conflict in Aave's governance exposes tension between DAO and Aave Labs.

• Aave's DAO generates $140 million in revenue.
• Rejected brand proposal deepens governance crisis.
• AAVE token falls amid criticism of internal purchases.

Aave's governance entered one of the most tense periods in its history during the holiday season, when disagreements between Aave Labs and the DAO came to light amid record revenue figures and a significant drop in the AAVE token. The debate intensified after the rejection of a proposal that sought to transfer the brand's assets to a structure controlled by the DAO.

In 2025, Aave's DAO accumulated approximately US$140 million in revenue, surpassing the combined total of the previous three years. This performance placed AAVE token holders at the center of treasury control, reinforcing the economic relevance of on-chain governance. Still, the debate over who should hold the rights to the protocol's brand, domains, and intellectual property has caused a clear division between the community and the development team.

The Aave Request for Comments (ARFC) proposal was rejected with over 55% of votes against, while approximately 41% of participants abstained. The result highlighted resistance to the transfer of Aave Labs' brand assets to DAO, as well as criticism of the timing of the vote, considered unfavorable due to the low participation typical of the holiday season.

Amid the backlash, Aave founder Stani Kulechov sought to clarify his position in a public statement. “I am committed to clarifying the economic interests between Aave Labs and the holders of the $AAVE token,” he stated. He also acknowledged communication failures and highlighted that “the DAO generated $140 million in revenue this year, exceeding the total revenue of the last three years, and the holders of the $AAVE token have control over these funds.”

The market reacted quickly to the uncertainty. The price of AAVE fell by about 20%, dropping from around $180 to levels around $140. The pressure increased after the revelation that Kulechov had acquired between $10 million and $15 million worth of AAVE tokens, a move that generated criticism about a possible strengthening of voting power. The founder denied any intention to influence recent votes, stating that "these tokens were not used to vote on the recent proposal; that was never my intention."

Beyond the dispute over the brand, community members raised concerns about fee routing and interface changes, which could impact the DAO's value capture. In this context, Aave's governance came to be seen as a relevant test of alignment between development, treasury, and token holder interests.

At the end of a week marked by rejected proposals, public criticism, and market volatility, Aave remains with a financially strong DAO, but is under pressure to redefine governance and communication processes at a crucial moment for the protocol.