Freed From the SEC, Aave Turns Its Fire Inward Over Who Owns the Brand

A four-year regulatory overhang lifted for Aave in mid-December 2025, only for the protocol to spend the following weeks consumed by an internal dispute over ownership, revenue, and control that markets found just as unsettling as any SEC probe.

01A fee dispute becomes a governance crisis

On December 16, 2025, the SEC closed its investigation into the Aave Protocol without taking enforcement action, closing out four years of regulatory uncertainty. Hours later, on the very same day, Ernesto Boado — former Aave Labs CTO and current BGD Labs co-founder — posted a proposal to the Aave governance forum asking whether the DAO, rather than founder Stani Kulechov's private company Aave Labs, should formally control the project's domains, social accounts, and brand IP.

That question didn't come out of nowhere. It followed weeks of argument over roughly $10 million a year in swap-related fees that had previously reached the DAO treasury but had recently begun flowing to Aave Labs instead.

The trigger was a routine-sounding integration. On December 4, 2025, Aave Labs announced a partnership with CoW Swap meant to improve swap execution and MEV protection on aave.com — the kind of update that normally draws no scrutiny. Under the surface, the economics had shifted. Previously, a ParaSwap partnership dating back to June 2022 had sent referral fees straight to the DAO treasury, worth about $1.1 million in 2025 alone. The CoW Swap deal instead carried frontend fees of 15 to 25 basis points, and on-chain data pointed to roughly $200,000 a week in ETH moving to a single address that was not the treasury.

A week after the new integration went live, governance delegate EzR3aL — described in the forum as the largest independent voice in Aave governance, representing Orbit — published an on-chain trace of the fee flows. Using test transactions on both Ethereum mainnet and Arbitrum, he showed the appCode matched the Aave v3 interface widget and that fees on both networks landed at the same wallet, 0xC542C2F197c4939154017c802B0583C596438380. By his count, 45.99 ETH — about $152,000 at the time — had already moved on Ethereum alone, with Arbitrum showing the identical pattern. Extrapolated across a year at roughly $200,000 weekly, he put the DAO's opportunity cost at more than $10 million annually.

Aave Labs' answer, posted to the same thread, drew a line between the protocol and the interface: the DAO funds protocol development and approves on-chain contract changes, while Aave Labs independently funds and maintains its own frontend. Monetization, the company said, only touched accessory features like collateral swaps, not core protocol economics such as borrow interest. Stani Kulechov added, in a separate forum reply, that the earlier ParaSwap arrangement had generated a voluntary surplus of roughly $200,000–$250,000 per quarter donated to the treasury — money that, in his view, could just as easily have gone to users or to Labs, since it came from "the Aave Labs application," not the protocol itself. That surplus disappeared once Labs built new CoW Swap adapters and rerouted execution.

Marc Zeller, head of the Aave Chan Initiative, rejected that framing. He argued every DAO-funded service provider owes token holders a fiduciary duty, and that an unwritten bargain had always underpinned the relationship: the DAO lends its brand and IP to Labs, and Labs channels interface revenue back to the treasury in return. "We've been fooled in considering this a natural alignment," he wrote, "and we acknowledge the new reality."

The dispute reduced to one question: does building the frontend entitle Labs to monetize the Aave brand indefinitely, or does the DAO — which funded years of development, paid for a recent rebrand, and owns the protocol itself — have the stronger claim to that revenue? Aave Labs noted that nothing was exclusive to its interface: users could interact with contracts directly, self-host, or the DAO could stand up its own frontend. Critics countered that the fee only works because of brand recognition the DAO itself paid to build, and that most users default to app.aave.com precisely because of that brand identity.

02Three competing proposals in 48 hours

Boado's forum post — "[ARFC] $AAVE token alignment. Phase 1 - Ownership" — asked explicitly whether AAVE holders should gain formal control over the aave.com domain and its subdomains, the project's social accounts (Twitter, Discord, Instagram), its GitHub organizations (Aave and Aave-dao), its NPM namespaces, and the right to license the "Aave" name. All of it currently sat with various entities — chiefly Aave Labs and BGD Labs — under informal understandings that had functioned fine until the CoW Swap fee flows changed the picture. His proposal called for moving these assets into a DAO-controlled legal entity with anti-capture safeguards and enforceable recourse. He was careful to frame it as a structural question rather than an attack on Aave Labs' legitimacy as a contributor, while disclosing his own AAVE holdings and BGD Labs' business relationship with Aave Labs.

Marc Zeller supplemented the proposal with historical context. The entity once known as "Aave Companies" had rebranded to Avara around 2021–2022, a deliberately neutral name that loosened the tie between the private company and the protocol, as its focus shifted to other ventures like Lens. Meanwhile, day-to-day protocol work — risk parameters, governance coordination, technical maintenance, and new integrations — had fallen largely to DAO-funded service providers: BGD Labs, Chaos Labs, LlamaRisk, TokenLogic, and the ACI. Zeller credited these providers with driving real revenue growth, citing Aave's rise as a hub for liquid-restaking borrowing during the EtherFi/LRT wave, its deployment becoming Aave's second-largest network on Plasma, integrations with MetaMask and Consensys, and institutional distribution through partners like Kraken. He also pointed out that several people who built Aave's early success — Boado himself, a key front-end contributor named Andrey, and a contributor named David who founded Catapulta — had left Aave Labs specifically to build DAO-aligned infrastructure. Zeller described himself as a day-one Aave employee whose compensation vests entirely in AAVE tokens, with no Avara equity: "My incentives have stayed consistent," he said, "I have concentrated my efforts on the Aave protocol and AAVE token because that was the vision we signed up for." Aave co-founder Jordan made a similar point: several founders of major service providers came out of Aave Labs and left precisely to serve the protocol and DAO instead. Elsewhere, Jordan framed the underlying rift as a divide between people who treated DAOs as a regulatory shield and people who saw them as the actual end state of transparent coordination.

Boado's measured proposal didn't stay the most extreme position for long. The next day, December 17, a user called tulipking posted "Aave Improvement Proposal: The Poison Pill," calling for the DAO to sue Aave Labs outright for full ownership of its code, IP, and brand, seize 100% of the company's equity, and claw back all past revenue tied to Aave Labs and Aave-branded products. "This is not a negotiation; it is a declaration of sovereignty," the post read. "The DAO owns the protocol, the brand, and the future. Aave Labs exists only at the pleasure of the DAO." Next to that, Boado's original ask suddenly looked moderate.

Stani Kulechov offered a third vision the same day the SEC news broke. His post, "The Master Plan," laid out plans for Aave V4's unified liquidity architecture, deeper institutional adoption, and a Horizon platform for tokenized real-world assets, alongside an Aave App envisioned as a consumer gateway with zero-fee fiat on-ramps reaching roughly 70% of global capital markets, aimed at bringing a trillion dollars on-chain and onboarding the protocol's first million users. Arriving just as the ownership debate was heating up on the forum, the post effectively argued that Labs — the builder — needed to stay in control. "I've seen a lot of the discourse within the DAO forum," Kulechov wrote. "Let me be very clear, no one cares about Aave more than I do."

Within 48 hours, the DAO had three incompatible paths in front of it: Boado's structured handover of assets to the DAO, tulipking's scorched-earth seizure of Aave Labs entirely, and Kulechov's vision that assumed Labs would keep running the show. Ordinarily, a proposal like Boado's would spend weeks in forum discussion before any vote — refined, possibly split into phases, clarified on implementation. That didn't happen here.

03An unauthorized vote lands on Christmas Day

On December 21, Aave Labs pushed Boado's proposal to a binding Snapshot vote — five days after it was posted, while forum debate was still active, without telling the author beforehand, and without his consent, even though his name remained attached as though he had signed off. Voting opened December 22 at 7:40 PM and was set to close December 25 at 7:40 PM — Christmas Day.

Boado said he learned about the move only after the fact. "To be very clear: This is not, in ethos, my proposal," he wrote. "Aave Labs has (for whatever reason) unilaterally submitted my proposal to vote in a rush, with my name on it, and without notifying me at all. If asked, I would not have approved it." He added that pushing the vote while the community was "still having a healthy discussion around it, with valuable points appearing continuously... breaks all codes of trust with the community," and called rushing the vote "disgraceful." The forum record between December 16 and 21 backs up his description of ongoing debate — delegates were still raising implementation and legal-structure questions and new arguments were surfacing daily.

Kulechov defended the timing as procedurally sound: "The discussion has been going over the past 5 days already with various opinions and takes, a timeline set on the ARFC temp check. The Snapshot is in compliance of the governance framework." He noted other service providers, including the ACI, have moved proposals to a vote in similar fashion, and argued that "people are tired of this discussion and getting into a vote is the best way to resolve" it. Marc Zeller disagreed sharply: "We acknowledge Aave unilaterally escalated the proposal to Snapshot without resolving discussion, without clear consensus, and without consent from Ernesto," he wrote, calling it "this unprecedented interference in the DAO governance process" and "an entirely preventable" worst-case outcome. He also flagged a wave of new delegations carrying significant voting power that had appeared just before the vote, saying it "adds to the perception of a rushed escalation optimized for outcome rather than legitimacy." Simo, who works on Protocol Growth at Aave Labs, pushed back on the idea that the timing was unfair: "The claim that 'discussion was still evolving' is just false. Minimal input. Largely repetitive. Same arguments. Same narrative," and separately asked, "DAOs stop in December? Pause for Christmas, Easter, Summer? Important decisions don't become less important because it's mid-Dec."

Both camps had legitimate points — five days of discussion had produced more than 100 forum replies, the governance framework technically allowed escalation at that stage, and nothing in the rules exempted holidays. But none of that resolved the core problem: the proposal's own author had not agreed to advance it, and calling his own proposal "disgraceful" in its current form undercut any claim to legitimacy regardless of the technical process. Boado told supporters directly: "If you don't agree with the legitimacy of the proposal, Abstain or don't participate. I will be creating my own when the proposal has had proper time to discuss and digest." Marc Zeller and the ACI followed with a formal call to abstain: "Following the proposal author's recommendation, we will cast an ABSTAIN vote and invite the community to do the same." A Polymarket market on the proposal's passage saw its odds collapse from around 50% to 4% within days as the author disowned his own proposal and major delegates urged abstention.

04The market's verdict, in real time

Prices moved before governance ever settled anything. AAVE rallied roughly 3% on the SEC news on December 16, briefly touching $187.85. Boado's ownership proposal, released the same day, didn't move the price further, and it held even after Kulechov's Master Plan followed hours later. The poison-pill proposal on December 17 caused only a wobble, with the token stabilizing just under $180.

The real damage started with the forced Snapshot escalation on December 21. AAVE fell from roughly $178 to $159 within 24 hours — about a 10% drop — as the market absorbed the author's public disavowal, the abstention campaign, and the collapsing Polymarket odds simultaneously. Trading volume spiked more than 220% over the same window, and one wallet reportedly sold roughly $37.8 million of AAVE at an estimated $13.75 million loss, with other holders exiting alongside it. From December 16 through December 23, AAVE was down 18% over seven days, with a peak-to-trough drawdown of 25% and the token sitting around $150 by December 23 — before the vote had even closed.

Polymarket's odds swung wildly through the episode. Starting near an even 50-50 with a slight lean toward the proposal passing, odds rose as high as 78.5% on December 18. On December 21, the day of the forced escalation, they opened around 14%, spiked to 64.5%, and settled near 25% by day's end. On December 22, following Boado's public condemnation the day before and Zeller's live abstain campaign, odds fell from 24% to 4%, and by December 23 they were still hovering near 4%. The market's message was consistent: the vote lacked legitimacy, and either it would fail or the abstention effort would neutralize it without resolving anything.

Commentators drew their own conclusions. Pseudonymous trader Tulip King wrote, "It seems like the Labs is trying to rush a conclusion to the issue before the DAO can coordinate, imo if this proposal fails AAVE should go to zero" — reflecting a broader worry that if the DAO can't assert control over its own brand and revenue, the governance token's value proposition is unclear. Duo Nine pointed to Hyperliquid as an alternative model, where roughly 97% of trading fees flow into HYPE buybacks and the team is compensated in the token itself, asking why Aave Labs couldn't adopt something similar. Observers framed Aave's situation as a textbook principal-agent problem: Labs treats the frontend as a separate, monetizable product while the DAO governs on-chain parameters, and the roughly $10 million a year in redirected fees benefits the agent rather than the principal.

The irony of the timing wasn't lost on anyone. The same day Kulechov announced, "After four years, we are finally ready to share that the SEC has concluded its investigation into the Aave Protocol. DeFi will win," a proposal questioning his company's control over the Aave brand was posted to governance — and five days later his company forced that same question to a vote without its author's consent. A spokesperson for Aave Labs framed the episode as evidence of "a maturing ecosystem working through questions of structure, representation, and expectations as it scales." Markets, judging by the price action, heard something closer to an unresolved ownership fight playing out via a contested vote timed over the holidays — even as TVL held steady around $35 billion and annualized fees stayed strong at $885 million, with the protocol itself functioning normally throughout.

05Vote fails, negotiations begin

The Snapshot vote closed on Christmas Day with 55% opposed, 41% abstained, and 3.5% in favor. AAVE was trading around $155, down 22% from where the dispute began, and neither faction treated the result as settled. Aave Labs read it as a straightforward defeat of the proposal and a return to the status quo. Marc Zeller read the same numbers differently: "Despite an unfair timeline and every practical disadvantage stacked against the DAO, participation broke records. That is not a defeat for decentralization. It is the opposite of apathy, and that is exactly what a healthy DAO should look like." He signaled a rematch was coming: "When a mature, legitimate vote is re-run with the author's consent and a complete discussion cycle, participation should be even higher."

The reversal came fast. On January 2, 2026, Kulechov posted "How AAVE will win" to the governance forum, pairing a strategic pitch — DeFi lending alone can't sustain Aave's growth, so the protocol needs to expand into real-world assets, institutional lending, and consumer products, chasing a slice of the roughly $500 trillion in global financial assets still waiting to be tokenized, largely through Aave V4's hub-and-spoke architecture and the Horizon RWA platform — with a concrete concession: "Given the recent conversations in the community, at Aave Labs we are committed to sharing revenue generated outside the protocol with token holders. Alignment is important for us and for AAVE holders, and we'll follow up soon with a formal proposal." On brand ownership, he added that Aave Labs would "work toward a structure in our upcoming proposal that supports this long-term vision with sufficient guardrails for the DAO and Aave token holders." Both commitments were still short on specifics, but the market reacted favorably: AAVE jumped 10% to $166.

Zeller wasn't satisfied with vague language. "Vague statements without clear and concise commitments should be discarded as performative," he wrote, while still calling the shift "the right direction." He also put a number on the cost of the standoff: "Since this dispute became public, roughly $500M of $AAVE market cap has been erased. Correlation is not causation, but markets price uncertainty, and the lack of direct engagement on core questions amplified that uncertainty." His underlying demand hadn't moved: "Aave's strategic brand assets and gateways should belong entirely to a DAO-owned vehicle. Stewardship can be delegated back to Avara under a clear operational mandate and security standards." He laid out what a Phase 2 proposal would need to include — which assets transfer to the DAO (domains, handles, naming rights, trademarks), what gets licensed back to Labs and under what scope and duration, measurable stewardship standards, guardrails against another unilateral fee like the CoW Swap episode, enforceable recourse if commitments are broken, and durability against future changes in corporate priorities — and offered the ACI's help convening stakeholders to turn that into a formal proposal.

Where that leaves things: Kulechov has offered revenue sharing and vaguely defined brand "guardrails" while keeping Aave Labs in control; Zeller and allies want outright ownership transferred to the DAO with stewardship merely licensed back, plus enforcement mechanisms. That gap is what Phase 2 of the negotiation will have to close.

06Where it stands

Aave spent four years convincing regulators that decentralized finance could operate lawfully, then spent a few weeks in December 2025 raising doubts about whether its own governance could function under pressure. The protocol's fundamentals never wavered — figures cited put total value locked around $40 billion, annual fees near $885 million, and roughly 59% market share in DeFi lending — but none of that insulated the token from a dispute over who controls the brand, who captures interface revenue, and whether a proposal can be forced to a vote without its author's consent.

The market's read was unambiguous: AAVE fell about 25% over six days, Polymarket pricing bottomed near 4%, and at least one large holder exited at a steep loss. The vote failed on Christmas Day, Kulechov followed with an offer of revenue sharing, Zeller countered with a demand for full ownership transfer, and the token clawed back about 10% while remaining roughly 20% below its pre-dispute level. Negotiations toward a second, more binding round are underway, with close to $500 million in market capitalization already lost as the price of getting there.