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Aave DAO rejects a token alignment proposal, exposing governance tensions over asset control and decentralization.
Author: Akshat Thakur
Published On: Fri, 26 Dec 2025 15:19:13 GMT
December 26, 2025 — Aave DAO rejects token alignment as token holders voted against transferring off-chain assets to DAO control. The Aave DAO rejects token alignment amid growing accusations of power concentration, procedural manipulation, and unresolved decentralization risks.
Aave operates under a split governance structure separating on-chain authority from off-chain ownership. As Aave DAO rejects token alignment, long-standing concerns around economic alignment and asset control moved into the open. While token holders govern smart contracts and the treasury, Aave Labs controls trademarks, domains, frontends, and developer infrastructure.
This imbalance has existed since the protocol’s rebrand from ETHLend in 2020. With DAO revenues exceeding $140 million in 2025 and total value locked above $33 billion, pressure mounted to realign ownership with risk-bearing participants.
The rejected proposal, titled Token Alignment Phase 1: Ownership, sought to transfer Aave’s brand assets, IP, domains, and social channels to a DAO-controlled entity. The Snapshot vote concluded on December 26, 2025, with 55.29% voting against, 41.21% abstaining, and only 3.5% in favor. Supporters argued that abstentions reflected implicit support for decentralization rather than rejection.
Critics countered that the outcome demonstrated clear resistance to immediate asset transfer. The proposal was escalated to a vote without the author’s explicit approval, escalating internal conflict. Voting during the Christmas period further fueled allegations of procedural misconduct.
Aave Labs pitches improved swap pricing and MEV protection on the Aave frontend, setting the stage for a fee-routing dispute.
An on-chain analysis claims swap fees from the CoW Swap flow (estimated at ~$10M/year) route to a private wallet controlled by Aave Labs, not the DAO treasury.
Marc Zeller (ACI; largest delegate) calls the move “stealth privatization,” arguing it erodes DAO-aligned revenue and governance credibility.
“Poison Pill” demands seizing IP/code/brand and clawing back past revenues; a second proposal calls for immediate transfer of trademarks, domains, and socials to the DAO.
Aave Labs escalates the proposal to a Snapshot vote without the author’s approval; critics cite holiday timing and participation suppression, while abstentions are urged.
Turnout accelerates late as the DAO mobilizes. Separately, Kulechov’s ~$15M AAVE buy (Dec 23) fuels “governance attack” claims, which he disputes as unused in the vote.
The immediate catalyst for the token alignment proposal emerged earlier in December following a frontend integration with CoW Swap. On-chain analysis suggested that swap fees, estimated near $10 million annually, were routed to a wallet associated with Aave Labs instead of the DAO treasury.
As the Aave DAO rejects token alignment, delegates framed the issue as protection against value extraction rather than hostility toward Labs. Aave Labs responded that frontend revenue was not a protocol fee and characterized the integration as a user benefit. The disagreement hardened positions on both sides.
DAO advocates argue that token holders fund development, absorb economic risk, and therefore must control strategic assets. They frame the issue as one of sovereignty rather than hostility toward Aave Labs. In contrast, Labs maintains that centralized stewardship is necessary for security, development velocity, and protocol adoption.
Founder Stani Kulechov warned that abrupt governance changes could jeopardize Aave V4 development. He also acknowledged communication failures and pledged clearer economic transparency going forward. The standoff reflects a deeper philosophical divide over how decentralized protocols should scale.
Following the vote in which the Aave DAO rejects token alignment, AAVE experienced short-term volatility, falling roughly 5% before stabilizing near $155. Trading volumes increased as investors positioned for a potential revote.
A revised proposal with clearer enforcement terms is expected in January 2026. Kulechov’s $15 million AAVE purchase ahead of the vote added scrutiny, though he denied influencing governance outcomes. The resolution may set precedent for how DAOs assert authority over development entities across DeFi.
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