Aave DAO faces public power struggle over $51M funding proposal

The Aave DAO is witnessing a power tussle play out publicly as the Aave Chain Initiative (ACI) published a detailed attack today, February 25, questioning Aave Labs’ spending and accountability. 

A few hours later, Aave Labs replied with its defense, tabling almost a decade of contributions to the success of the protocol. 

The clash arises as both platforms contest a $51 million funding proposal, which will make Aave Labs the largest benefactor in the history of the DAO. Meanwhile, the tentative April 11, 2026, exit of BDG Labs under contentious conditions remains unattended.

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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