AAVE token drops 20% as governance control battle intensifies

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Yaroslav Dmytrenko

23.12.2025

AAVE token drops 20% as governance control battle intensifies — Investors fear DAO vote could undermine Aave’s market dominance

Over the past week, the native token of the largest lending protocol AAVE has lost almost 20% of its value, as investors are concerned about the potential outcome of a vote to transfer trademarks, the domain, and social media accounts from Aave Labs to the DAO.

According to CryptoSlate, the battle for control of Aave, the decentralized lending giant with $52 billion in assets, has escalated from debates over interface economics into an open civil war over governance legitimacy.

What began as a dispute over $10 million in annual swap fees and brand ownership has, over the past 24 hours, turned into an intense procedural struggle between the protocol’s decentralized autonomous organization (DAO) and its development arm, Aave Labs (also known as Avara).

A Snapshot vote is scheduled for December 22–26. The ballot proposes transferring Aave’s “soft assets,” including trademarks, the domain, and social media accounts, from Aave Labs to the DAO.

Participants must choose between two competing visions for the future: the democratic idealism of the DAO or the ruthless efficiency of the corporate structure that built Aave’s success. The outcome will decide not only who controls the protocol’s URL, but also whether a decentralized collective can effectively run a multibillion-dollar software business.

Concerns about the protocol’s future intensified as the vote approached. Over the past 7 days, the AAVE token has fallen 19% to $151 at the time of writing, as insiders warn the results could threaten the protocol’s dominance in the DeFi lending market.

AAVE price dynamics over 30 days. Source: CoinMarketCap

Many prominent ecosystem members — including Ernesto Boado (co-founder of BGD Labs, a key protocol service provider) and Marc Zeller (founder of Aave Chan Initiative) — harshly criticized the vote, calling it premature.

Zeller described it as a “hostile takeover attempt,” noting that the timing during the holiday season — a period of extremely low institutional voter activity — locks in the decision before opposition can mobilize.

However, Stani Kulechov insists the vote is necessary, arguing against delaying governance challenges. He said the community has shown strong engagement with the proposal, meaning “it is time for token holders to voice their opinion and vote,” dismissing procedural complaints and stating that five days of forum discussion was sufficient and the community is tired.

Behind the façade of pure decentralization

Meanwhile, more industry veterans are rallying to defend Aave Labs, arguing that the DAO’s push for “ownership” reflects a fundamental misunderstanding of why Aave became successful in the first place.

Nader Dabit, Director of Developer Relations at EigenLayer, delivered a sharp critique of the proposal, calling it a self-sabotaging idea.

“The proposal is framed as decentralization, but in practice it would disadvantage the organization most responsible for Aave’s success and looks almost like a coordinated power grab,” Dabit said.

His argument touches on an uncomfortable truth in DeFi: despite decentralization rhetoric, market dominance is almost always achieved through centralized execution.

“The protocol worked as a DAO. The Labs operated as a company. This division of labor and resources has proven extremely effective, while competitors with ‘purer’ governance models stalled, failed or disappeared,” he noted.

Dabit also argued that DAOs “are not capable of producing competitive software or being competitive in anything resembling real business,” because every decision requires a governance proposal, meaning “every fast-moving opportunity freezes on a forum thread while competitors ship.”

He added that stripping the company of assets and revenue flows would destroy incentives keeping top talent, claiming that weakening Labs “does not decentralize Aave, it significantly worsens it.”

As we wrote, Aave slips to $153 as loss of key support reinforces bearish structure

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