AAVE sheds 19% in a week as project descends into ‘civil war’

AAVE tumbles 19% as a governance fight erupts over control of the protocol and its revenues.

Over the past seven days, the native token of the Aave lending platform (AAVE) fell 19%, the worst performance among the 100 largest assets. 

The slump comes amid an escalating struggle within the Aave community for control of the protocol’s brand, domains and public channels. 

The stand-off between Aave Labs (the centralised development company) and DAO Aave (tokenholders and other community members) began with a contentious deal.

On December 4 Aave Labs announced a partnership with CoW Swap, ostensibly to improve swap pricing and integrate MEV protection into the protocol’s interface.

On December 11, a popular delegate under the pseudonym EzR3aL published an analysis according to which the fees from the updated swap contracts are routed to a private wallet controlled by Aave Labs, rather than the DAO.

Thus the decentralised organisation lost the lion’s share of its revenues. 

“Has Aave Labs secretly hidden from the treasury millions of dollars collected as swap fees?” wrote EzR3aL.

After the analysis was published, the largest delegate and network activist Marc Zeller called the situation a covert privatisation of the project. By his calculation, the DAO potentially lost roughly $10m in annual revenue because of the company’s actions.

On December 16, former CTO of Aave Labs Ernesto Boado presented a proposal with changes that envisaged: 

• transferring to the DAO control over all intellectual property, code and the product’s brand; 
• restructuring Aave Labs as a subsidiary of the decentralised organisation;
• returning to the treasury all past revenues earned under the brand.

By December 21 Aave Labs put the proposal to a preliminary community vote, which began on December 23. Boado was listed as the sole author. 

The company said that community discussions demonstrated the need for an emergency response. However, Boado himself called the vote hasty and said he had not agreed the publication with Aave Labs. He also urged tokenholders to abstain. 

“I was not going to put the proposal to a vote while the community was actively discussing it, constantly adding valuable comments. This breaks all norms of trust. Public governance should entail open discussion, even if it is sometimes difficult. Trying to rush the vote is a disgrace,” he said.

Zeller also criticised the timing, adding that the holiday period reduces coordination and turnout among large holders, including institutions.

“A full-blown civil war has broken out inside Aave. […] This is not about CoW Swap. It is not about a single wallet, but about a settled question for DeFi: who actually owns the protocol? The code? The front end? Or the brand? Aave is about to set a precedent. And everyone is watching,” — stressed a user under the nickname Observe, who compiled a chronology of events. 

At the time of writing, 63% had voted against the proposal, with 32% abstaining. 

Token movements

Although the debate has played out solely within the community via social networks and forums, the situation clearly spooked investors. Analysts began to log large token transfers. 

According to Onchain Lens, on December 22 a whale swapped its entire AAVE stash of 230,350 tokens for 5,869 stETH ($17.5m) and 227.8 WBTC ($20m). These actions pushed the token down by about 10%.

A whale sold all 230,350 $AAVE for 5,869.46 $stETH ($17.52M) and 227.8 $WBTC ($20.07M) in the past 3 hours, causing $AAVE to drop by ~10%.

Address: 0xa923b13270f8622b5d5960634200dc4302b7611e

Data @nansen_ai pic.twitter.com/4G2dVm8kDt

— Onchain Lens (@OnchainLens) December 22, 2025

At the same time, researchers at Lookonchain recorded purchases of AAVE from a wallet allegedly linked to Aave founder Stani Kulechov.

Stani Kulechov(@StaniKulechov), the founder of @Aave, bought 32,660 $AAVE($5.15M) at $158 again 7 hours ago.

He has bought a total of 84,033 $AAVE($12.6M) at an average cost of $176 over the past week, currently sitting on an unrealized loss of $2.2M.https://t.co/HEXO1r7uQK pic.twitter.com/k0pWQCmwGr

— Lookonchain (@lookonchain) December 23, 2025

Over the week of declines, the address accumulated 84,033 AAVE ($12.6m) at an average price of $176. It currently sits on an unrealised loss of more than $2m.

In December, the US Securities and Exchange Commission concluded a four-year investigation into the Aave platform.