By the end of 2025, a story has erupted around Aave, which is already being referred to as a "civil war" in the crypto community. This is how the analyst from Observe describes the situation — and his portrayal sounds quite accurate.
Inside the project, a split is observed: the community and the team are in conflict over power, money, and control of the project. We explain the reasons behind the conflict and why Aave's "civil war" may set a precedent for DeFi.
The regulator retreated, but it hasn't become calmer
On December 17, 2025, the SEC concluded its years-long investigation against Aave without fines or sanctions. Pressure from the regulator eased, and the formal threats disappeared. The SEC retained the right to return to the case if necessary, but at that time it looked like a closed topic.
Instead of calmness, internal disputes began.
Conflict in the community
Aave Labs, the team that builds and supports the product, switched to a new service CoWSwap for exchanging crypto within the platform. Formally, this looked like an improvement in conditions for users and additional protection.
After some time, one of the active DAO participants published an analysis of on-chain data and stated that fees from exchanges are no longer flowing into the DAO treasury and are being directed to a wallet controlled by Aave Labs.
Major delegate Mark Zeller estimated potential losses at around $10,000,000 per year and called what was happening 'quiet privatization.' From this moment, the dispute escalated into an open conflict.
'You are taking the common good'
Part of the community considered the situation unacceptable. Their position looks like this:
if the project is decentralized and managed by the DAO, then key things should not be controlled by a private company;
revenues from the product should go to the DAO treasury;
the Aave brand and related assets should not belong to the company, but to the community;
financial flows cannot be quietly changed without coordination with the DAO.
Against this background, strict initiatives began to emerge:
the demand to transfer the Aave brand to the DAO;
to transfer domains and social media under the control of the DAO;
discussion of transferring intellectual property to the DAO;
ideas to effectively limit Aave Labs' influence on the 'external' part of the project.
Aave Labs responded as follows:
there was no fraud;
they used to share revenue with the DAO voluntarily;
the company pays for the development, support, and security of the product;
the DAO manages the protocol, but the interfaces, brand, and infrastructure belong to Labs.
And this is where the fault line became clear:
for part of the community, Labs' position sounds logical;
for another part, it looks like the privatization of what has long been considered common.
Turning point
On December 22, Aave founder Stani Kulechov announced that the so-called 'alignment proposal' would be put to a vote in Snapshot — a system where AAVE token holders vote. He stated that there had been enough discussions and now the decision should be made by the DAO.
Formally, it looked like a step towards organizing the process. In practice, the degree of conflict escalated even more.
Part of the community is convinced that the voting was launched too quickly and not at the fairest time. One of the crypto enthusiasts, Tulip King, stated that it resembles an attempt to push through a decision during a time when people are busy with holidays and the level of coordination is lower. There were also extremely harsh formulations, including statements that in the event of such a vote failing, AAVE would have no value.
A user under the nickname lito publicly addressed Stani and stated that the product named Aave, in his opinion, should belong to the DAO and benefit token holders. At the same time, he emphasized that he values Aave Labs and is not advocating for war with the team, but for a fair and transparent model in which the team and the community are indeed moving in the same direction.
It turns out that many are dissatisfied precisely with the feeling of privatization of what was previously perceived as common.
Notably, Stani has been actively buying AAVE tokens in the meantime. In a week, he acquired over 84,000 tokens for about $12,600,000 at an average price of about $176. At that time, this position was in an unrealized loss of about $2,200,000.
Some saw the founder's actions as confidence in the project. Others saw it as a step to strengthen influence and monopoly.
It's no longer just about money
Analyst Aylo noted that the community's irritation is justified, as the interface relies on the reputation of the protocol, and the change in the financial model occurred without broad discussion within the DAO. At the same time, he understands the position of Labs: the company finances the product, pays for support and security, and transfers of revenues to the DAO were previously, according to them, voluntary.
Aylo's main point is that the dispute has long ceased to be about fees. It is a dispute about who really owns Aave. Formally, the DAO manages the smart contracts. In fact, the brand, domains, and significant external part of the ecosystem remain in the hands of the company.
Aylo also noted that the chances of the vote do not look very high. The author of the original idea was unhappy with the timing, some delegates saw the ongoing events as an attempt at pressure, and the market reacted with a drop in AAVE's price.
What is the real essence of the conflict
All this story comes down to one basic confrontation. The DAO and token holders believe that the project is decentralized and its value should remain within the decentralized autonomous organization. The development company believes that the external part of the project and the brand are the result of its work and responsibility. Smart contracts are under the DAO. Assets off-chain are controlled by Labs. This boundary has become the fault line.
Why this story is important not only for Aave
Aave has long been considered an example of how decentralization can work in reality. Now this entire situation has turned into a test for the DeFi industry.
If power consolidates with the DAO, belief in decentralized governance will become stronger. If control remains with Labs, the market may conclude that even in DeFi, real power often remains with companies rather than communities.
DeFi is maturing. And, as usual, it does so through conflicts and painful clashes of interests.
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