Original Title: “Second Largest Holder Liquidates at a Loss, Can AAVE Still Be Bought Amid Deepening Discord?”
Original Author: Azuma, Odaily Planet Daily
The leading lending protocol Aave is embroiled in a public opinion storm, with escalating tensions between the team and the community, objectively undermining confidence among token holders in the AAVE token itself.
Early this morning, the second largest AAVE whale, excluding project parties, protocol contracts, and CEXs, liquidated 230,000 AAVE (worth approximately $38 million) at a loss, causing AAVE to drop 12% in the short term. It is reported that this “second largest holder” purchased AAVE at an average price of $223.4 from late last year to early this year, with today’s liquidation averaging around $165, resulting in a final loss of $13.45 million.
· Odaily Note: The whale address is https://debank.com/profile/0xa923b13270f8622b5d5960634200dc4302b7611e.
Event Origin: Fee Flow Dispute
To clarify Aave’s current community crisis, we must start with a recent change to the Aave frontend.
On December 4, Aave announced a partnership with Cow Swap, adopting the latter as the default trading route for Aave’s frontend swap function (Odaily Note: previously ParaSwap), leveraging its anti-MEV feature for better quotes.
This seemed like a normal functional upgrade, but the community soon discovered that additional fees generated by this function (including referral fees or positive slippage surplus fees), which previously flowed to the Aave DAO treasury address when using ParaSwap, were now redirected to the Aave Labs address after switching to Cow Swap.
Community representative EzR3aL first noticed this change that Aave did not proactively disclose, questioning the Aave team in the governance forum and estimating that, based on tracking Aave’s revenue flows on Ethereum and Arbitrum alone, this fee could generate around $200,000 weekly, corresponding to over $10 million in annualized revenue—meaning Aave transferred at least tens of millions in revenue from the community address to the team address with almost no one aware.
Core Dispute: Who Owns the Aave Brand?
As EzR3aL’s post gained traction, many AAVE holders felt betrayed, especially considering that Aave made this change without communicating with the community or disclosing it, seemingly intending to conceal the alteration.
In response to community concerns, Aave Labs directly replied under EzR3aL’s post, stating that there should be a clear distinction between the protocol layer and the product layer. The swap function interface on the Aave frontend is entirely operated by Aave Labs, which is responsible for funding, building, and maintaining it. This function is completely independent of the DAO-managed protocol, so Aave Labs has the right to autonomously decide how to operate and profit…Previously, revenue flowing to the Aave DAO address was a donation from Aave Labs, not an obligation.
In short, Aave Labs’ stance is that the Aave frontend interface and its affiliated functions are essentially team products, and the revenue generated should be considered company property, not conflated with the protocol and related revenue controlled by the DAO.
This statement quickly sparked heated debate within the community over the ownership of the Aave protocol and products. A well-known DeFi analyst wrote an article titled “Who Owns ‘Aave’: Aave Labs vs Aave DAO,” and BlockBeats republished a Chinese translation for those interested in further reading.
On December 16, the conflict escalated further. Former Aave CTO Ernesto Boado proposed in the governance forum to transfer control of Aave brand assets (including domain names, social accounts, naming rights, etc.) to AAVE token holders. These assets would be managed through a DAO-controlled entity (specific form to be determined later), with strict anti-encroachment protection mechanisms.
The proposal garnered nearly 10,000 views and hundreds of high-quality replies in the Aave governance forum, with various participants in the Aave ecosystem expressing their positions. Although some voices argued that the proposal’s execution plan was inadequate and risked exacerbating tensions, most replies expressed support.
Founder’s Statement, but Community Unconvinced
As community sentiment heated up, Aave founder Stani appeared in the forum, responding: “…This proposal leads us in a direction unfavorable to the Aave ecosystem. It attempts to simplify a complex legal and operational issue into a simple ‘yes/no’ vote without providing a clear execution path. Handling such complex issues should involve a specially designed structured process, with multiple interim checks and specific solutions to reach consensus. For these reasons, I will vote against this proposal…”
From a business operations perspective, Stani’s claim that the proposal is too hasty may not be wrong, but in the current discussion atmosphere, this statement is easily interpreted as ‘Aave founder disagrees with transferring brand assets to token holders,’ further intensifying tensions between the community and the team.
After Stani’s statement, some aggressive comments targeting Stani even appeared under the original post, with more users expressing dissatisfaction via forums or social media. An OG user mentioned considering liquidating AAVE for the first time, while a loyal AAVE believer stated: “AAVE holders should realize this is just another DeFi shitcoin. It’s neither better nor worse than others.“
The latest community development, as mentioned at the beginning of this article, is the second largest holder exiting with a loss of over ten million dollars.
Can AAVE Still Be Bought?
At that time, AAVE was still favored by top institutions like Multicoin Capital, with its strong brand reputation, substantial deposited funds, clear expansion path, robust revenue, and buyback flows proving AAVE was a ‘true value token’ different from other altcoins.
But in just two weeks, a public opinion crisis—from fee ownership to brand control to team-community relations—has rapidly plunged AAVE from a ‘value token representative’ into the center of controversy, even landing on the short-term decline list due to emotional impact.
As of writing, Aave Labs has indicated under Ernesto’s proposal that an ARFC snapshot vote has been initiated, allowing AAVE token holders to formally express their positions to clarify future direction. The outcome of this vote and the subsequent handling attitude of the Aave Labs team will undoubtedly significantly impact Aave’s community faith and AAVE’s short-term price performance.
It must be emphasized that this event is not merely ‘negative news’ or ‘performance changes,’ but a concentrated interrogation of Aave’s existing governance structure and rights boundaries.
If you believe Aave Labs will remain highly aligned with Aave DAO on long-term interests, and the current friction is more a communication and process error, then the price pullback driven by sentiment might be a good entry window; but if you think this dispute exposes not an isolated issue, but a structural contradiction of long-unclear rights between team and protocol, lacking institutional constraints, then this turmoil might just be the beginning.
From a broader perspective, Aave’s controversy is not an isolated case. As DeFi matures, protocol revenue becomes substantial and real, and brands and frontends gain commercial value, some structural contradictions between protocol and product, team and community will surface. Aave is thrust into the spotlight this time not because it erred more, but because it has gone further.
This debate over fees, brand, and control requires answers not just from AAVE, but is an inevitable question the entire DeFi industry will eventually face.
