As the undisputed leader in the DeFi lending sector, Aave has long held the top spot in the industry, boasting a TVL (Total Value Locked) of nearly $27 billion. However, in the first quarter of 2026, this giant faced its most severe internal upheaval since its inception. BGD Labs—the core technical contributor behind Aave v3—announced it would not renew its contract. Shortly thereafter, the Aave Chan Initiative (ACI) declared it would cease operations and exit the ecosystem. In less than a month, Aave lost its two most important independent contributors. This crisis wasn’t a mere team dispute; it was a concentrated eruption of structural flaws within DeFi’s decentralized governance.
Why Did Core Contributors Leave Aave One After Another?
BGD Labs was once regarded as the driving force behind Aave’s technical innovation. Founded in 2022 by former Aave CTO Ernesto Boado, the team led the development of v3 and played a decisive role in the "Umbrella" security subsystem, multichain expansion, and asset onboarding processes. On February 20, 2026, BGD Labs announced it would not renew its current service contract, which was set to expire on April 1. Two weeks later, ACI founder Marc Zeller announced the team would shut down operations. Zeller described this as "the most significant talent loss in Aave’s history"—a statement that is hardly an exaggeration.
How Did Governance Power Imbalances Erode Trust?
BGD Labs’ departure statement directly pointed to the growing "organizational asymmetry" within the Aave ecosystem. As Aave Labs regained control and shifted its strategic focus entirely to v4 development, the spirit of decentralized collaboration quickly unraveled. BGD Labs criticized Aave Labs for transforming from a technology company into a central driver manipulating the entire ecosystem—not only monopolizing brand assets and communication channels but also controlling enough voting power to sway major DAO decisions.
In the v4 development collaboration, Aave Labs held a massive budget but relegated other technical contributors to mere advisory roles, offering only "public opinions." BGD Labs bluntly stated that this development model, which lacked meaningful participation, severely wasted their technical potential.
Why Did Brand Assets and Revenue Distribution Become Flashpoints?
The seeds of this crisis were sown as early as the end of 2025. Without a governance discussion, Aave Labs replaced the frontend transaction aggregator ParaSwap with CoW Swap, redirecting fees that originally flowed to the DAO treasury into Aave Labs’ accounts. Aave founder Stani Kulechov responded that since the frontend was built by Labs, the revenue naturally belonged to Labs. While this explanation holds up legally, it sparked widespread dissatisfaction within the community.
Subsequently, BGD Labs’ Boado proposed transferring brand assets to DAO management. Aave Labs pushed the vote during the Christmas period, but Kulechov personally voted against it, and the proposal ultimately failed. Community members criticized this as a strategic use of timing to manipulate power.
Why Did Bundled Proposals Intensify Community Tensions?
In February 2026, Aave Labs submitted a proposal titled "Aave Will Win," requesting DAO approval for approximately $51 million in funding for v4 development. In exchange, all future revenue from Aave-branded products would be allocated to the DAO, with v3 gradually phased out. The problem was that three issues were bundled together: If you supported revenue going to the DAO but thought the funding was excessive, you had no choice. If you believed v3 still had value and shouldn’t be sidelined, you were also out of options. It was all or nothing.
ACI’s accusations went deeper: a significant portion of votes supporting the proposal came from addresses linked to Aave Labs. The preliminary vote passed by a slim margin of 52.58%. ACI argued that without these "self-votes," the outcome might have been different. Zeller wrote, "If the largest budget recipient can use undisclosed voting power to force through its own proposal, then independent service providers have no place in the DAO."
What Is the Structural Dilemma of Decentralized Governance?
Originally, the Aave ecosystem’s power structure featured a three-way balance: Aave Labs controlled the codebase, brand domains, social media, and development discourse; BGD Labs maintained the flagship v3 version, which contributed over 75% of protocol revenue and 97% of total deposits; ACI handled governance coordination and business development, driving 61% of governance actions over the past three years. With both BGD and ACI gone, no matter how the remaining power center postures, it’s hard to inspire full confidence.
More notably, institutional investor Blockchain Capital later revealed that its AAVE holdings couldn’t participate in the vote because its custodial platform didn’t support Snapshot voting. This highlights another DAO governance reality: while token holders are supposed to make collective decisions, in practice, voting power is often concentrated in the hands of a few.
A European Central Bank working paper from March 2026 provides quantitative backing for this view. The study found that in Aave, MakerDAO, Ampleforth, and Uniswap, the top 100 governance token holders control over 80% of the supply, and in some protocols, the top 20 voters control as much as 96% of delegated voting power. There remains a vast gap between the theory and practice of "decentralization."
What Uncertainties Lie Ahead for Aave v4?
Aave v4 is the cornerstone of founder Stani Kulechov’s 2026 "master plan," adopting a hub-and-spoke model to unify fragmented liquidity and aiming to support trillions of dollars in assets. BGD Labs expressed strong dissatisfaction, arguing that Aave Labs took an "adversarial stance" in promoting v4, frequently criticizing v3’s shortcomings to justify the necessity of v4 development.
The most pressing issue now is this: with those best equipped to assess v3’s technical risks gone, how can the DAO confidently bet its future on an untested v4? While BGD Labs has promised to provide transition documentation and maintenance guides, four years of accumulated technical expertise and ecosystem understanding cannot be replaced by documents alone.
Governance Lessons for the DeFi Industry
Aave’s governance crisis is not an isolated incident. In 2025, Uniswap DAO core representative Pepo resigned over concerns about power centralization, criticizing the Uniswap Foundation for prioritizing its own interests over the DAO’s. Scroll completely shut down its DAO in favor of centralized governance, and Arbitrum’s "future vision" shifted decision-making power to the core team.
These cases all point to a central dilemma: DeFi protocols need centralized teams for technical development efficiency and expertise, but governance decisions require decentralized mechanisms to ensure openness and transparency. When core developers control brand assets, communication channels, and voting influence, decentralized governance becomes an empty shell. The European Central Bank’s report also noted that such centralization complicates the recognition of decentralized exemptions under the MiCA framework.
Conclusion
BGD Labs’ exit from Aave is not an isolated personnel change but a concentrated outbreak of structural contradictions in DeFi’s decentralized governance. With its triple advantage of brand, funding, and voting power, Aave Labs has gradually become the ecosystem’s power center. The successive departures of BGD and ACI have disrupted the previous balance of power. When those who best understand the protocol’s technical risks choose to leave, Aave v4’s future is cast into doubt. The DeFi industry must find a genuine balance between development efficiency and decentralized governance—or else Aave’s predicament may become a preview of challenges facing many DeFi protocols in the future.
FAQ
Q: Can Aave v3 continue to operate normally after BGD Labs’ departure?
BGD Labs has pledged to complete its scheduled improvements before the contract ends and to release comprehensive technical documentation and maintenance guides to help other contributors take over. The team believes Aave’s current infrastructure is highly robust, and the existing governance structure can operate indefinitely without major changes. However, four years of accumulated technical know-how and ecosystem insight cannot be fully conveyed through documents, so long-term maintenance remains uncertain.
Q: Why did the Aave founder oppose transferring brand assets to the DAO?
Kulechov argued that transferring the brand would "slow down and potentially undermine" the protocol’s momentum. From a business perspective, as the protocol’s actual developer, Aave Labs retaining brand control helps maintain strategic alignment. However, from a governance standpoint, this move further concentrates power within Labs, which the community sees as a betrayal of the spirit of decentralization.
Q: How is AAVE performing in the market right now?
As of April 8, 2026, according to Gate market data, the AAVE price changed by +1.67% over the past 24 hours and +57.54% over the past 30 days. However, since the governance crisis, the token has seen significant volatility, and the overall DeFi sector remains under pressure, with market sentiment still cautious.
Q: How are other DeFi protocols addressing similar governance challenges?
Some protocols have opted for clearer structural designs. MakerDAO’s "Endgame Plan" aims to decentralize governance across multiple sub-DAOs; Curve relies on the ve-token model to align long-term interests. Yet research from the European Central Bank shows that power concentration remains a widespread industry issue, and no mature solution has emerged.
Q: What are the root causes of DAO governance centralization?
The main reasons are: first, extremely low participation rates among token holders, with only 5% to 12% actually voting; second, delegated voting mechanisms concentrate power in the hands of a few representatives; third, core development teams naturally possess information advantages and execution capabilities, and this structural imbalance is difficult to eliminate through rules alone.
