Aave DAO Faces Critical Test: Second Major Player Announces Withdrawal

The governance crisis at DeFi protocol Aave continues to escalate. Following BGD Labs, the Aave Chan Initiative (ACI) has now also announced its withdrawal. ACI founder Marc Zeller stated that the organization would not seek a contract extension and would wind down its activities over a four-month period^[1].

The trigger for the escalation was a dispute over the use of fee revenues. In December, a community member criticized that revenues from a CoW Swap integration flowed to Aave Labs instead of the DAO Treasury – without a prior governance vote^[1].

This evolved into a fundamental debate about control and accountability. A proposal by BGD Labs to transfer brand assets to the DAO failed in a Snapshot vote. In February, Aave Labs introduced a new proposal: $51 million in funding in exchange for 100 percent of revenues from Aave-branded products^[1].

The proposal was approved with just under 53 percent of the vote. However, Zeller criticized that approximately 233,000 AAVE tokens from Labs-affiliated wallets decided the outcome. This demonstrates that a single entity possesses enough voting weight to push through its own budget proposals. The governance process is "not decentralized enough," Zeller concluded^[1].