BGD Labs to exit Aave after four years

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BGD Labs exits Aave

Strategic rift over Aave’s direction

Founded in early 2022, BGD Labs was created to build within the DeFi ecosystem and has since focused almost exclusively on Aave. The team led or collaborated on major subsystems, most notably Aave v3, which it described as the protocol’s “crown jewel.” Over time, many early product deficiencies were addressed, and BGD maintains that Aave’s liquidity protocol and governance systems are now mature and future-proof.

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However, tensions have emerged over the strategic direction of the ecosystem. Aave Labs, previously known as Avara Labs, has pivoted toward becoming a more central contributor, particularly with the development of Aave v4. BGD argues that this shift has been “badly executed,” claiming Aave Labs expects the broader DAO to align with its roadmap without sufficient consideration of other contributors’ expertise.

A major point of contention concerns the positioning of Aave v4 relative to v3. BGD criticized what it called an “implicit/explicit criticism of Aave v3” used to promote v4. It also objected to proposals to pause new features for v3 and gradually adjust parameters post-v4 launch to encourage migration. According to BGD, such measures would be “borderline outrageous” given that v3 remains the dominant revenue-generating engine of the protocol.

Offboarding plan and security retainer

Despite the departure, BGD emphasized that its current scope remains unchanged until April 1. Ongoing projects — including v3 upgrades, new chain expansions, asset onboarding and the Umbrella risk framework — will either be completed or documented for handover.

To mitigate risks during the transition, BGD proposed a two-month “Transitional security retainer” from April 1 to June 1, 2026, at a cost of $200,000. Under this arrangement, the firm would remain available for incident handling related to Aave v3, governance and Umbrella systems, subject to DAO approval.

Aave, one of DeFi’s largest lending protocols, has historically relied on distributed service providers to maintain decentralization. BGD’s exit highlights the governance and coordination challenges facing maturing DAO ecosystems as they balance innovation, product continuity and power distribution.

Conclusion

BGD Labs’ departure underscores growing strategic tensions within the Aave ecosystem. The dispute centers on governance alignment and the transition from v3 to v4. The coming months will test the DAO’s ability to manage decentralization while sustaining technical stability.

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