Aave Governance Group Exits Ecosystem

The departure of the Aave Chan Initiative (ACI) follows closely on the heels of another key contributor, BGD Labs, leaving the ecosystem in February. BGD Labs, the primary engineering team behind the widely-used Aave V3, cited an aggressive push by Aave Labs to prioritize the upcoming V4 as a reason for their exit. The loss of two major service providers in quick succession highlights a deepening power struggle within Aave's governance. At the heart of the conflict is the "Aave Will Win" proposal, which passed a preliminary "temperature check" vote with a slim 52.58% majority. This proposal would redirect 100% of revenue from all Aave-branded products to the DAO's treasury. Covered revenue streams include fees from Aave.com, a future Aave Card, and institutional offerings like Aave Pro and Aave Horizon. In exchange for routing all product revenue to the DAO, Aave Labs requested a substantial budget of up to $42.5 million in stablecoins and 75,000 AAVE tokens to fund future development. Critics, including ACI founder Marc Zeller, raised concerns over the size of the funding request and what they described as a lack of transparency and accountability from Aave Labs. The ACI stated there is no role for an independent service provider when the largest budget recipient, Aave Labs, allegedly uses its own voting power to pass its own proposals. This accusation points to a fundamental breakdown in trust over governance processes. The ACI was responsible for 61% of all governance actions and revenue strategies that drive 48% of protocol income. The ACI will wind down its activities over a four-month period, focusing on handing off its responsibilities. These duties include managing incentive programs, governance tooling, and holding seats on the Aave Liquidity Committee and as a Guardian multisig signer. The departure leaves a significant void in governance participation and operational management for the Aave protocol. This internal conflict and the departure of key builders introduce significant uncertainty for Aave, the largest DeFi lending protocol with nearly $27 billion in user deposits. The dispute raises critical questions about the balance of power between core developers and the DAO, the future of Aave V3 maintenance, and the path forward for the protocol's ambitious V4 upgrade.