Aave’s DAO-Labs board battle has wiped out about $500 million in AAVE value, but Santiment data shows top holders are piling up and deposits, revenue and sentiment are all recovering.
Summary
- Santiment links a $500 million AAVE withdrawal drawdown to revenue sharing, IP, and brand control disputes between Aave Labs and the DAO, culminating in a failed brand transfer vote.
- Despite the sell-off, Aave’s deposits rose about 60% year-over-year and weekly revenues are on track for record levels in 2025, underscoring the resilient protocol fundamentals.
- The top 100 AAVE addresses grew their share from about 72% to 80% as major wallets and founder Stani Kulechov made purchases during the dip, indicating a perceived “stress test” of governance and not a collapse.
Cryptocurrency analytics firm Santiment has released a comprehensive analysis of decentralized finance protocol Aave and its AAVE token, detailing a governance dispute that has caused significant market volatility, according to a report published by the company.
Aave Labs in governance dispute
The governance crisis between the Decentralized Autonomous Organization (DAO) and Aave Labs resulted in approximately $500 million in market value loss for AAVE, the report said. However, on-chain data indicated that large investors accumulated tokens during the decline rather than liquidating their positions.
The disputes stemmed from disagreements between the DAO and Aave Labs over revenue sharing, governance structures and trademark rights, Santiment said. Allegations emerged that the developer company failed to transfer revenue from certain integrations to the DAO treasury, leading to backlash within the community. The report notes that social media posts about AAVE have increased sharply since mid-December.
Despite the price drop in mid-December, the protocol’s fundamentals remained robust, Santiment said. Aave deposits increased by around 60% year-on-year, with weekly revenue expected to reach record levels by the end of 2025. The discrepancy between price performance and fundamental measures raised concerns that tensions between DAO and companies are putting pressure on the token’s valuation, the analysis found.
Activity in the chain changed significantly around December 22, Santiment data showed. Large AAVE wallet holders initiated buying positions during the price drop. The share of the total AAVE supply of the top 100 addresses increased from approximately 72% to 80%. Balance increases in portfolios with more than $1 million in AAVE suggested the offering was withdrawn from the exchanges, possibly indicating a supply crunch, the report said.
The governance tension reached a critical point with a vote to transfer the Aave brand and intellectual property rights to DAO control. The rejection of the vote revealed significant divisions within the community, according to Santiment. Reports that founder Stani Kulechov had purchased significant amounts of AAVE before the dispute intensified the controversy. While there was no evidence that these purchases manipulated governance, the concentration of token ownership raised questions about decentralized decision-making processes, the report said.
Market sentiment began to change when Aave Labs signaled a possible policy shift, Santiment reported. The company announced that revenue from activities outside the core protocol could be shared with AAVE token holders, a move that was positively received by the community. Following this development, Santiment’s sentiment analysis showed a significant increase in the number of positive comments and a limited number of negative comments. According to the report, the day before AAVE reached its highest bull-to-bear comment ratio since before the dispute began.
Data from the derivatives markets also supported signs of recovery, Santiment said.
The company characterized the events at Aave as a real-time stress test for decentralized governance. While discussions between the DAO and Aave Labs continue, the response from long-term investors suggests that the analysis sees the crisis as part of the protocol’s maturation process and not a catastrophic event.
