
BGD Labs, the web3 development team, announced that it will not renew its service contract with the Aave DAO
Author: Sahil Thakur
High attention and emotional sentiment detected.
21st February 2026 – BGD Labs, the web3 development team founded by former Aave CTO Ernesto Boado, announced that it will not renew its service contract with the Aave DAO. The current agreement expires on April 1, 2026, after which BGD will cease all contributions.
The team described the move as a deliberate and anticipated decision. However, the announcement immediately triggered shock across the Aave ecosystem.
High Signal Summary For A Quick Glance
jfab.eth
@josefabregab
I'm genuinely upset about the BGD Labs news. It's a huge loss and I'd like to see them stay. I also think they will ensure seamless continuity no matter what and this is peak bearish sentiment for ETHLend, later renamed @aave: the most battle-tested DeFi protocol. 8 years. Zero https://t.co/65HNcUFqV7
I’m speechless. @bgdlabs is one of the main responsible parties for Aave’s success. They were behind most of Aave’s upgrades since 2022, and since TVL was under $20B. I really hope there’s something that can be done to retain them, because those are some big shoes to fill. https://t.co/J5VZgDZylN
06:06 PM·Feb 20, 2026
DeFi Voyager
@DeFiVoyager_X
Probably everyone saw $AAVE dump. BGD Labs, the core infra team behind @aave for 4 years, are walking away. And it’s not a soft exit. They weren’t side contributors. These guys: – Built and iterated Aave v3 – Ran the governance infrastructure – Upgraded Safety Module and https://t.co/LdKK22HQg5

02:27 PM·Feb 20, 2026
Ignas | DeFi
@DefiIgnas
BGD Labs are rage quitting Aave DAO after 4 years. They built Aave v3, governance infra, Umbrella, and most core systems. Why they're leaving: - Aave Labs pivoted from independent company to central contributor pushing v4 - Aave Labs controls the brand, comms, and has voting https://t.co/MqRR105eEK

01:52 PM·Feb 20, 2026
BGD Labs has served as Aave’s primary technical service provider since early 2022. For long stretches, it operated as the DAO’s dominant engineering team.
Its contributions include:
In short, BGD built and maintained much of the core infrastructure behind Aave’s current $26B+ TVL footprint.
BGD’s governance forum post outlined several key concerns.
According to BGD, Aave Labs, led by founder Stani Kulechov, has become the central force behind branding, communication channels, and technical direction. They argue this creates an uneven power structure inside what is supposed to be a decentralized DAO.
Aave Labs now leads development of Aave V4 and controls major narrative and voting influence. BGD claims this deviates from merit-based decentralization.
BGD stated that Aave Labs built V4 largely independently. Existing contributor teams were sidelined. In some cases, BGD says Labs expected unpaid advice rather than structured collaboration.
This reduced alignment between teams that previously worked closely together.
Aave V3 remains the dominant and battle-tested lending product. However, BGD argues that recent messaging and proposals implicitly criticized V3 to accelerate migration to V4.
Some proposals suggested pausing improvements or adjusting parameters in ways that could pressure users to migrate before V4 is production-ready. BGD believes V3 still has significant untapped potential.
BGD emphasized that there will be no abrupt disruption.
Additionally, BGD proposed a two-month transitional security retainer. The DAO would pay $200,000 from April to June 2026 so BGD can handle critical Immunefi reports or security incidents during the handover. Stani Kulechov has already signaled support for this proposal.
The Aave founder posted a respectful and appreciative statement. He credited BGD for shaping V3 and acknowledged Ernesto’s historical role in Aave’s growth.
Stani stated there will be zero protocol disruption. He confirmed Aave Labs’ 90-person team will assume maintenance responsibilities. He also pledged to vote in favor of the security retainer.
Zeller described the departure as devastating. He called BGD the most productive engineering team in Aave’s history and noted that they “saved Aave more than once.”
He also disclosed selling part of his AAVE holdings following the news.
Ignas published a widely shared thread summarizing BGD’s grievances. He framed the exit as a rage quit driven by governance tensions. He also floated hypothetical scenarios, including potential forks or ecosystem splits, though he labeled them unlikely.
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The AAVE token fell between 3% and 6% within hours of the announcement. It traded near $118 amid elevated volatility.
The decline reflects uncertainty rather than any technical malfunction. The protocol itself continues operating normally.
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There is no operational breakage. Aave V3 continues functioning, and Aave Labs will assume direct responsibility for maintenance.
If the DAO approves the security retainer, near-term vulnerability risk remains low.
This event intensifies the decentralization discussion.
Expect new proposals around:
The core question is whether Aave is evolving toward centralized execution or recommitting to DAO-driven meritocracy.
Aave V4, which has been in testnet since late 2025, now becomes the undisputed flagship product under Aave Labs.
The DAO must decide whether to accelerate V3 deprecation or maintain dual-track support longer. Poor coordination could create user confusion or TVL fragmentation.
Many describe BGD’s departure as the most significant talent loss in Aave’s history.
If Aave Labs executes smoothly and V4 delivers, the protocol could emerge stronger and more streamlined. However, if governance tensions persist or execution falters, competitors like Morpho or future forks could gain traction.
BGD left the door open to future ecosystem innovation. That includes the possibility of building complementary or competing infrastructure.
Aave remains the largest DeFi lending protocol with solid fundamentals and no immediate operational risk.
However, BGD Labs’ departure marks a clear inflection point. The tension between centralized execution and decentralized governance has moved from theoretical debate to real-world consequence.
How the DAO navigates this transition will shape Aave’s next phase.
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$119.01