Aave DAO’s $51M Funding Proposal Sparks Public Power Struggle
Governance drama erupts as Aave's decentralized collective wrestles over a massive capital allocation—proving that even in Web3, money talks louder than consensus.
The Battle for the Treasury
A public rift has split the Aave community wide open. The catalyst? A single funding proposal worth a cool $51 million. This isn't just a routine vote; it's a full-blown power struggle playing out on-chain and across social forums, highlighting the raw, often messy, reality of decentralized governance when serious capital is on the line.
Factions are forming, with delegates and token holders clashing over strategic direction, resource allocation, and ultimately, who controls the protocol's future. The debate cuts to the core of DAO functionality: Is this efficient capital deployment or a reckless dilution of the community treasury? Each side is marshaling arguments, with forum posts and voting strategies becoming the new battlegrounds.
Lines Drawn in Digital Sand
The conflict bypasses backroom deals, forcing every strategic disagreement into the glaring public eye. Proponents argue the funding is critical for aggressive expansion and ecosystem development. Opponents see a bloated budget and a dangerous precedent—a slippery slope toward the very centralized spending DAOs were built to avoid. It's a high-stakes test of on-chain voting mechanics and collective decision-making under pressure.
Active voter coalitions are now the key power brokers, turning what was once a technical governance process into a political campaign. The outcome will set a major precedent for how other major DeFi protocols manage—and fight over—their war chests.
At its heart, this struggle reveals an ironic truth: the quest for decentralized utopia often just reinvents old-fashioned boardroom battles, complete with posturing, alliances, and the occasional financial jab worthy of any traditional hedge fund drama.
What is ACI accusing Aave Labs of?
In a document published on the governance platform, ACI founder Marc Zeller details what he calls Aave Labs’ inability to deliver results equal to the amount of funds they have received. Zeller mentions that in the last decade, Aave Labs has received $86 million in total capital to fund the protocol and has failed projects and deals to show for it.
These payments include $16.2 million gotten from the 2017 initial coin offering, $32.5 million from venture capital rounds, $31.93 million in direct DAO payments, and approximately $5.5 million in what Zeller cites as “unapproved swap fees” from a CoW Swap integration.
The document also mentions six Aave Labs projects: Aave App, Lens, Family, Arc, GHO, and Horizon, which the ACI terms as either failed or unprofitable projects, with Horizon particularly costing the DAO around $24 for every $1 earned.
Lastly, the ACI president cited Aave Lab’s low participation in the organization’s decision-making process, despite being its highest-funded member.
Zeller also goes on to provide data showing that Aave Labs started only 47 platform discussions and completed 43 technical updates, which pales when compared to other members like Chaos Labs, ACI, and BDG Labs.
Aave Labs responds with its own defense
A few hours after the ACI publication, Aave Labs responded to the criticism with a report of its own, emphasizing its role as the protocol’s founding developers.
The report highlights Labs’ effort in the growth of the protocol, mentioning key historical moments, such as the 2017 ETHLend ICO, Aave V1, V2, and V3, also hinting that Labs has been behind major technological innovations in the ecosystem, such as Flash Loans, the Safety Module, Efficiency Mode, and GHO stablecoin development.
The report goes on to argue that platform success cannot be measured by the number of forum posts submitted, adding that new major features take thousands of hours and cannot be compared to a single settings change, which only takes a couple of days.
Finally, Aave Labs noted that the protocol’s income of over $140 million in 2025 is a result of the price of ETH going up, and not the efforts of certain service providers in the ecosystem.
Why is BDG leaving Aave?
The recent conflict seems to have more adverse effects as BDG has decided to no longer contribute to the Aave DAO from April 11, 2026. This is a major blow as BDG, formed in 2022, has been responsible for major updates in the system, such as the revised governance and management system of the protocol.
In their letter, BDG explained that they no longer believe they can work with the current situation, pointing out the structural imbalances and Labs’ control over the brand and communications, terming it “difficult to overcome”.
The document goes on to mention how Aave Labs has considerable voting power on big decisions on the protocol, stating boldly that “Every time we think about improving v3, there will be some type of implicit/explicit artificial constraint.”
Despite the internal drama, Aave token is up more than 5% in the last 24 hours, even defying broader market headwinds.
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