Aave DAO Controversy Rekindles Debate on Tokenholder Rights

Aave is at the center of a governance dispute after the DAO and Aave Labs clashed across forums and social media, initially over fee distribution. But the debate has turned into a full-blown indictment of how many major crypto organizations are structured.

At the core of the disagreement is the question of what role should DAOs and companies play, and the difference between token holders and equity holders.

In response, Ernesto Boado, co-founder of BGD Labs and former CTO at Aave Labs, proposed a multi-phase token alignment proposal aimed at clarifying the role and rights of AAVE tokenholders.

'Make $AAVE Win'

Following a week of back-and-forth, Aave co-founder Stani Kulechov posted an article on X highlighting Aave’s journey so far and its outlook for 2026, and reiterated his intent to “make $AAVE win.”

“Everything we build is designed to drive value to the primary fee capture mechanisms of the protocol, all of which accrue to the DAO.” he continued. Kulechov sees Aave as the primary credit layer and backbone of future onchain economy and said that despite Aave’s leading position in DeFi “we’re just getting started.”

Aave Labs told The Defiant: “Recent proposals and discussion on the Aave governance forum reflect a maturing ecosystem working through questions of structure, representation, and expectations as it scales. We will continue engaging constructively in governance processes. Aave Labs and the Aave DAO share a long-term commitment to the growth and resilience of the Aave Protocol."

Boado praised Aave DAO’s pertinence to Aave’s success, citing the importance of different groups such as BGD Labs, Aave Chan Initiative (ACI), Chaos Labs, and LlamaRisk that contribute to its product, growth, and risk improvements.

He told The Defiant: “My proposal tries to be a fully neutral vote that has arguably no downside to the AAVE token holders: if AAVE should own 'Aave' and its assets and implications. For anybody holding AAVE tokens (including Stani, Labs, or their employees), I simply can't understand why that is negative from the perspective of being a token holder.”

Commenting on the token purchases, Boado concluded: "I don't really see how it is even related to making a decisive movement for ownership and transparency from the AAVE token holders' perspective. There are thousands and thousands of entities holding AAVE tokens, and the interests of everybody as a whole are the sole objective of my proposal.”

Fee Distribution and Alignment Issues

The debate comes after an Aave DAO delegate found that, after Aave Labs integrated decentralized exchange aggregator CowSwap to Aave.com, the company started directing fees of about $200,000 per week, which were previously sent to Aave DAO, to Aave Labs instead.

This post on the Aave governance forum sparked a public dispute between DAO delegates and Aave Labs team members. Marc Zeller, founder of the Aave Chan Initiative (ACI), which is one of the top service providers for Aave DAO, called the arrangement “unacceptable.”

Kulechov argued the fees “sit entirely outside the protocol the DAO stewards” and therefore Labs is entitled to them.

Tensions escalated over the weekend, after another delegate at the ACI known as nandy.eth accused Aavle Labs on X of attempting to “exploit the DAO multiple times this year, then cried when delegates exposed their acts and unalignment.”

Stani's $10M AAVE Buy

Kulechov hit the orderbook to prove his stance in a post that simply read “$AAVE aligned,” linking to a series of Ethereum transactions showing Kulechov purchasing roughly $10 million worth of AAVE on the open market.

On top of his open market buys, Stani shared an update from the United States Securities and Exchange Commission (SEC), stating that the organization had concluded its investigation into Aave as of August 2025, and would not be recommending any enforcement action.

Despite the sizable purchase and regulatory clarity, the AAVE token is flat today, and down 9% over the last week.

Token Alignment Proposal

Boado published the “Phase 1 - Ownership” proposal to the governance forums on Dec. 16, requesting AAVE token holders to receive “control of Aave’s brand assets on a DAO-controlled vehicle with strong anti-capture protections”.

Under the proposal, the DAO-controlled entity would hold rights to the Aave domain and the user-facing software application.

The proposal argues that “if a single party can control soft assets like brand, marketing channels, gateways, and ‘Aave’ attribution, all other contributors become de facto subordinated to that party. This undermines neutral incentives to contribute to a common good, namely the DAO and $AAVE.”

If passed, Aave would become almost entirely DAO-led to maintain neutrality among parties aligned through token investments.

Early reactions from DAO delegates indicate broad support for the proposal’s objectives.

Zeller praised the alignment proposal and said on X, “This is not only the most important proposal in the history of the Aave governance but also will have a long-lasting impact on the DAO model and how tokens should be valued.”

As of publication, Aave Labs had not publicly responded to the proposal on governance forums or social media.

Disclaimer: This story has been updated to include comments from Aave Labs and Ernesto Boado, co-founder of BGD Labs and former CTO at Aave Labs.