Aave faces internal divisions over transparency and revenue distribution

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Hanna Syniavska

25.02.2026

Aave faces internal divisions over transparency and revenue distribution — Aave governance vote looms

A governance dispute is escalating at Aave, the largest DeFi lending protocol, ahead of a $51 million funding vote under the slogan “Aave Will Win.” Aave Chan Initiative (ACI) and its founder Marc Zeller published a detailed audit of Aave Labs’ activities. The report claims that cumulative funding received by Labs has reached approximately $86 million.

Highlights

A governance conflict has intensified at Aave ahead of a major funding vote.
ACI has questioned the transparency of spending and the effectiveness of Aave Labs.
The uncertainty has already coincided with capital outflows and stronger competitive momentum.
The outcome of the vote will test the resilience of Aave governance and its leadership in DeFi.

This figure includes proceeds from the 2017 ICO, venture capital investments, direct DAO payments and interface-generated fees, The Block reported. ACI urged tokenholders to carefully review the calculations before making a decision. The vote comes at a time when accountability and disclosure have become central issues across the ecosystem. At stake is not only the budget, but also the distribution of influence within the protocol.

Zeller argued that Labs has not provided a detailed breakdown of expenses or measurable performance indicators. The criticism also targets the accelerated transition to Aave V4 and the structure of revenue allocation. According to ACI, the absence of clear ROI metrics makes it difficult to assess the effectiveness of past spending. The dispute also involves wallet disclosure and voting power concentration in governance. Service providers, who are said to have driven much of the operational growth after V3, are also part of the debate. The conflict reflects broader tensions over the balance of power between developers and the DAO. For the market, it signals structural risks within the leading lending protocol.

Horizon, fees and revenue structure

A significant portion of the audit focuses on the RWA market Horizon. According to published data, Horizon’s total supply stands at approximately $466 million. About 69% consists of stablecoins, while only 31% represents tokenized real-world assets, largely concentrated in a single instrument. After excluding incentive-driven positions, ACI estimates the “effective” RWA market to be significantly smaller than headline TVL figures suggest. This raises questions about diversification and sustainability. Critics argue that aggregate metrics do not fully reflect actual market structure. Horizon has therefore become central to the transparency debate.

DAO revenue from Horizon is estimated at roughly $216,000, while incentive payouts and related expenses amount to several million dollars. Critics highlight an imbalance between costs and generated income. ACI also alleged that a portion of partner fees was redirected without a separate governance vote. Published data show 933 ETH distributed on mainnet, with total allocations including Layer 2 approaching $5.5 million. These figures have intensified scrutiny of the protocol’s fee mechanics. The revenue model has become a focal point of the broader governance dispute.

Liquidity outflows and competitive pressure

The governance conflict has coincided with shifting market dynamics. Aave’s TVL stands at approximately $42.8 billion, maintaining its leadership position. However, growth over the past six months was only 3.8%, while net capital outflows reached 5.2% over the past 30 days. Governance instability has prompted investors to reallocate liquidity. Markets tend to react quickly to signs of internal tension. Institutional participants in particular prioritize predictable governance structures. Even temporary disputes can accelerate capital rotation.

Meanwhile, competitors are gaining momentum. According to CoinGecko, Morpho rose 46% over the past month, attracting institutional liquidity through its modular architecture and flexible risk management framework. These figures suggest capital redistribution within the sector. Market participants link the trend to strategic disagreements surrounding Aave’s development. In an increasingly competitive environment, governance risks directly affect market share. The dispute has evolved into a factor shaping capital flows.

V3 profitability, V4 transition and strategic risks for AAVE holders

Aave remains the largest DeFi lending protocol, but growth is slowing amid intensifying competition. Public analytics dashboards estimate that V3 generates about $150 million in annual revenue, making it one of the most profitable lending engines in the sector. The planned transition to V4 would reshape the protocol architecture and service provider model. For AAVE holders, the key issue extends beyond budget approval to the economic rationale behind the strategic shift. Revenue redistribution directly affects tokenomics and incentive alignment.

If the DAO continues increasing funding without clear performance metrics, investor confidence may weaken further. The RWA and institutional lending segment is entering a consolidation phase. Capital increasingly flows toward platforms with transparent governance and predictable revenue models. Aave’s decisions on reporting standards, fee allocation and power balance will determine whether it maintains leadership. In a tightening competitive landscape, governance missteps could erode market share. The vote will serve as a test of Aave’s governance maturity.

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