The leader lending protocol Aave has fallen into a whirlpool of public opinion, with increasing opposition between the team and the community. The second largest Holdings Whale has cut loss and closed all positions of 230,000 AAVE, incurring a loss of 13.45 million dollars. This dispute, from cost vesting to brand control, reveals the structural contradictions in DeFi protocol governance. (Previous summary: Aave will abandon multi-chain operations and shut down zkSync, Metis, and Soneium deployments) (Background Information: Aave founder announces the relaunch of ETHLend next year, bringing “true BTC” back to DeFi lending?)

Table of Contents

• Cause of the incident: Dispute over cost flow
• Core Controversy: Who actually owns the Aave brand?
• The founder expressed their stance, but the community is not buying it.
• Can AAVE still be bought?
• AAVE creates a one-month low

As DeFi moves far enough, the structural contradictions between protocols and products, teams and communities will come to light. The leading lending protocol Aave is caught in a whirlpool of public opinion, with the opposing sentiments between the team and the community continuing to escalate, which has objectively affected the confidence of token holders in the AAVE token itself.

On the early morning of the 22nd, the second largest AAVE whale, excluding project parties, protocol contracts, and CEX, cut loss and closed all positions of 230,000 AAVE (worth about 38 million USD), causing AAVE to drop 12% in the short term. It is reported that this “second biggest brother” bought the AAVE at an average price of 223.4 USD from the end of last year to the beginning of this year, and the average selling price today was about 165 USD, resulting in a final loss of 13.45 million USD.

Odaily Note: The whale address is https://debank.com/profile/0xa923b13270f8622b5d5960634200dc4302b7611e.

Cause of the incident: Dispute over cost allocation

To clarify the recent community crisis of Aave, we need to start with a recent change in the Aave front end.

On December 4th, Aave announced a partnership with Cow Swap, which will be used as the default trading path for Aave's frontend exchange functionality (note from Odaily: previously it was ParaSwap), achieving better pricing through the latter's anti-MEV features.

This was initially seen as a normal feature upgrade, but the community quickly discovered that the additional costs generated by this feature (including referral fees or positive slippage profit fees) when using ParaSwap would previously flow to the Aave DAO treasury address, but after switching to Cow Swap, it instead flowed to the Aave Labs address.

Community representative EzR3aL was the first to discover this change that Aave had not proactively mentioned. He questioned the Aave team in the governance forum and calculated that they were only tracking the income flow of Aave on Ethereum and Arbitrum. This fee is expected to bring about $200,000 in revenue per week, corresponding to an annualized income of over $10 million — this means that Aave has transferred at least tens of millions of dollars in income from community addresses to team addresses with almost nobody knowing.

Core Controversy: Who really owns the Aave brand?

As the post by EzR3aL fermented, a large number of AAVE holders felt backstabbed, especially considering that Aave did not communicate with the community during this change and made no disclosures, which somewhat suggests an intention to conceal this change.

In response to community concerns, Aave Labs positively replied under EzR3aL's post, stating that there should be a clear distinction between the protocol layer and the product layer. The exchange functionality interface on the Aave frontend is entirely operated by Aave Labs, which is responsible for funding, building, and maintaining it. This functionality is completely independent of the DAO-managed protocol, so Aave Labs has the authority to decide how to operate and profit… The income that previously flowed to the Aave DAO address was a donation from Aave Labs, but it was not an obligation.

In short, Aave Labs' stance is that the front-end interface and associated features of Aave essentially belong to the team’s products, and the income generated from them should also be regarded as company property, not to be confused with the protocol and related income controlled by the DAO.

Once this was said, a heated discussion quickly arose in the community surrounding the ownership issues of the Aave protocol and its products. A well-known DeFi analyst previously wrote an article titled “Who Really Owns Aave?”

On December 16, the contradictions were further intensified. Former Aave CTO Ernesto Boado proposed on the governance forum that the control of Aave brand assets (including domain names, social accounts, naming rights, etc.) be transferred to AAVE token holders. The related assets will be managed through a DAO-controlled entity (specific form to be determined later), and strict anti-occupancy protection mechanisms will be established.

The related proposal has garnered nearly ten thousand reads and over a hundred high-quality replies in the Aave governance forum, with participants from various parties within the Aave ecosystem expressing their opinions below the proposal. Although there are some voices suggesting that the execution plan of this proposal is not sufficiently完善 and raises suspicions of exacerbating divisions, the majority of replies have expressed a supportive attitude.

The founder expressed his stance, but the community is not buying it.

After the community sentiment continued to rise, Aave founder Stani appeared on the forum to respond, stating: “…this proposal leads us in a direction that is detrimental to the Aave ecosystem. It tries to forcefully simplify a complex legal and operational issue into a simple 'yes/no' vote, without providing a clear execution path. Such complex issues should be addressed with a specially designed structured process, achieving consensus through multiple interim checks and providing concrete solutions. For the reasons stated above, I will vote against this proposal…”

From a business operations perspective, Stani's claim that the proposal is too hasty may not be wrong, but in the current discussion atmosphere, this statement can easily be interpreted as “the Aave founder disagrees with transferring brand assets to token holders,” which obviously further intensifies the antagonistic sentiment between the community and the team.

After Stani's statement, there were even some aggressive comments targeting Stani below the original post, and more users expressed their dissatisfaction through forums or social media. An OG user mentioned that it was the first time he considered closing all positions on AAVE, while a loyal believer in AAVE stated, “AAVE holders should realize that this is just another DeFi garbage coin. It is neither better nor worse than other coins.”

The latest community update is about the second-ranked big brother who cut losses and left the market with losses exceeding ten million dollars, as mentioned at the beginning of this article.

Can I still buy AAVE?

Just two weeks ago, Odaily Planet Daily wrote an article titled “What did the smart money see when aggressively buying AAVE at a low position?” At that time, AAVE was still the favorite of top institutions like Multicoin Capital, and its excellent brand reputation, strong capital accumulation, clear expansion path, and robust revenue and buyback flow all proved that AAVE is a “true value coin” different from other altcoins.

But in just two weeks, a public relations crisis that spanned from cost attribution to brand control and then to team community relations quickly brought AAVE from being a “value coin representative” to the center of controversy, even landing on the short-term loss leaderboard under emotional impact.

As of the publication date, Aave Labs has indicated below Ernesto's proposal that an ARFC snapshot vote has been initiated regarding the proposal, allowing AAVE holders to formally express their stance to clarify the future development direction. The results of this vote and the subsequent handling attitude of the Aave Labs team are bound to significantly influence the community's faith in Aave and the short-term price performance of AAVE.

It is important to emphasize that this event is not simply a “negative news” or “performance change,” but rather a concentrated interrogation of Aave's existing governance structure and the boundaries of its rights.

If you believe that Aave Labs will continue to align closely with Aave DAO in terms of long-term interests, and that the current friction is more of a communication and process error, then the price pullback driven by emotions might present a better entry window; however, if you think that the controversy exposed is not an occasional issue but rather a structural contradiction due to long-term unclear interests between the team and the protocol, as well as a lack of institutional constraints, then this turmoil may just be the beginning.

From a more macro perspective, the controversy surrounding Aave is not an isolated case. As DeFi matures, protocol revenues become genuinely substantial, and brands and front-ends begin to gain commercial value, some structural contradictions between protocols and products, teams and communities will surface. Aave has been pushed into the spotlight this time, not because it is more wrong, but because it has gone further.

This debate about costs, branding, and control involves more than just AAVE; it is a question that the entire DeFi industry will inevitably have to face.

AAVE hits a one-month low

Supplement from Dongqu: AAVE has not shown a significant rebound since its rapid decline yesterday, currently reported at 150.69 USD, with its trend clearly decoupled from the broader market.