A notable report on the past performance and funding of the Labs unit within the Aave ecosystem, one of the leading decentralized finance (DeFi) protocols, has been publicly released.
A report published by Marc Zeller, founder of ACI, an organization contributing to the Aave ecosystem, raises important questions about Aave Labs’ funding history, token distribution, and product performance to date.
According to the report, Aave Labs has received approximately $86 million in capital support since 2017, including ICO funding, venture capital investments, and direct grants from the DAO. The founding team owned 23% of the LEND tokens during the 2017 ICO, which were then converted into AAVE tokens at a 100:1 ratio.
The document also states that Labs had a capital base of approximately $48.7 million before receiving funding from the DAO, and subsequently received approximately $37.4 million in grants from the DAO. Despite this, Labs is currently seeking an additional $51 million in funding under its ‘Aave Will Win’ proposal.
The most notable part of the report was Labs’ assessment of the performance of independent products outside the core protocol. Reportedly, all six independent products developed, with the exception of the core credit protocol, either failed or were unprofitable.
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The Horizon project, in particular its focus on real-world assets (RWA), was cited as an example. Although Horizon reportedly exceeded $1 billion in size at launch, it was noted that it actually held approximately $135 million in RWA collateral, much of it concentrated in a single asset. Launched in August 2025, the project has generated approximately $216,000 in revenue for the DAO to date, while incentives and associated costs amounted to approximately $5.25 million; this would indicate a negative return of about 24 to 1.
The report also notes that early core developers who worked on Aave V1, V2, and V3.0 left Labs between 2021 and 2022. V3.0 is described as the last major release developed under Labs’ leadership, with subsequent versions largely driven by DAO service providers.
Moreover, it was noted that the adoption of the Horizon proposal by a single large delegation played a crucial role and sparked new debates within the community on the centralization of governance and the efficiency of the use of funds.
This criticism coincided with the $17.5 million in new product growth grant proposals currently under consideration. This has further intensified ongoing debates within the Aave community over funding allocation, performance reporting and governance transparency.
*This is not investment advice.