After the ARFC proposal, does Aave still have long-term investment value?

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Recently, the Aave community has experienced governance disputes over the attribution of front-end commercialization revenues, which has triggered a re-examination of governance structure and business boundaries. In this round of governance controversy, the development entity Aave Labs integrated CoW Swap into the application front end, resulting in the additional fees generated from related transactions flowing directly to addresses controlled by Labs, sparking community debates over revenue transparency, brand asset ownership, and governance boundaries. In response, the community formally proposed the ARFC proposal, with the core goal of clarifying the governance ownership of Aave brand assets and related intangible assets, requiring the transfer of domain names, social media accounts, and brand rights to DAO management. Currently, this proposal has entered the Snapshot voting phase, with the voting window from December 23, 2025, to December 26, 2025. The current voting results show approximately 494,800 votes against, accounting for 64.15%. From the stage voting structure, there remains clear disagreement within the community on transferring brand assets directly to DAO control. The final outcome of this governance process will have a significant impact on how Aave will establish a stable balance mechanism among core developer incentives, brand control rights, and long-term interests of token holders.

1. Project Overview

Aave is currently one of the largest and most mature decentralized lending protocols. After years of iteration, Aave’s TVL has exceeded $33 billion, accounting for about 60% of the DeFi lending market. Its core value lies not in a single lending product but in building a non-custodial, permissionless on-chain liquidity market. In December 2025, the U.S. SEC officially concluded its years-long investigation into Aave without enforcement action, easing regulatory uncertainty and promoting Aave’s transition from a DeFi protocol primarily serving crypto-native users to a more compatible on-chain financial infrastructure, setting a positive example for overall DeFi compliance expectations. Aave founder Stani Kulechov recently established three major strategies for 2026: first, the full deployment of Aave V4, unifying cross-chain liquidity through a Hub-Spoke architecture to break down capital barriers between different blockchains; second, the large-scale expansion of Horizon RWA, which currently has net deposits of $550 million, with plans in 2026 to collaborate with institutions like Circle, Ripple, and Franklin Templeton to bring global assets such as U.S. Treasuries, ETFs, and commodities on-chain, aiming to surpass $1 billion in scale; third, the comprehensive promotion of the Aave App, aiming to transform complex lending operations into a mobile savings application.

2. Market Dynamics

Currently, the ARFC governance proposal within the Aave community has shown significant disagreement and quickly attracted market attention. The proposal was put forward by the former CTO of Aave Labs, now co-founder of BGD Labs, aiming to systematically clarify the governance ownership of Aave protocol’s intangible assets, requiring the consolidation of core assets such as domain names, official social media accounts, code repositories, and the “Aave” brand rights under the management of the Aave DAO. The direct background of this proposal stems from community doubts that some protocol fees and brand assets control arrangements have not been authorized by the DAO, leading to the protocol’s commercialization revenues not effectively benefiting the token system, which some holders see as weakening the value of AAVE tokens. This issue has sparked ongoing discussion on governance forums. On December 22, before community discussions fully converged, the proposal was directly advanced to a Snapshot off-chain vote, with the voting period set from December 23 to December 26. Due to the coinciding Christmas holiday, several governance participants raised objections to the process arrangement, believing it could affect token holder participation and the quality of negotiated governance.

Based on current voting progress and market feedback, this governance event has already had a substantial short-term emotional impact. As of now, approximately 494,800 votes are against, accounting for 64.15%; approximately 253,400 abstain, accounting for 32.85%; and about 23,200 votes in favor, accounting for 3.01%, indicating significant disagreement within the community on whether brand assets should be directly transferred to DAO control. During the voting process, explicit risk mitigation actions also appeared on-chain. On December 22, a long-term AAVE holder address sold in batches 230,000 AAVE tokens and converted the funds into stETH and WBTC. The AAVE price temporarily retraced about 10%, reaching a low of $156. However, the market generally interpreted this sell-off as a temporary risk avoidance of governance uncertainty rather than a negative signal on Aave’s fundamentals or long-term competitiveness.

3. Team Background

Aave originated in 2017. Its founder and CEO, Stani Kulechov, is one of the early entrepreneurs in the DeFi space to systematically build on-chain financial infrastructure. Stani has extensive experience in crypto and fintech entrepreneurship and has been actively involved in DeFi ecosystem development. At several key points, he has articulated the protocol’s long-term positioning and development directions, including V4 architecture upgrades, institutional lending capabilities, RWA integration, and broader application layer deployment.

Operationally, the protocol’s technical development and product advancement are primarily undertaken by Aave Labs, responsible for core contract development, upgrades, testing, and ecosystem expansion. The design philosophy emphasizes open source, modularity, and composability. Meanwhile, governance and strategic direction are not decided unilaterally by Labs but are coordinated and decided through the Aave DAO, which acts as the governance body, via on-chain and off-chain governance processes. The Aave DAO consists of token holders responsible for major parameter adjustments, fund utilization, protocol upgrades, and brand-related decisions. Regarding the division of responsibilities and boundaries among Aave DAO, Aave Labs, and the broader community, the protocol has established an operational framework with the DAO as the governance主体 and Aave Labs as the execution主体. The recent ARFC proposal is a governance discussion centered on some asset and authorization issues within this framework.

4. Token Information

Aave’s native token, AAVE, has a total supply of 16 million tokens, with approximately 15.19 million currently in circulation, nearing the maximum circulation, with limited new inflation space, making the token supply structure relatively stable. In this context, the value of AAVE depends more on its functional positioning in governance, risk bearing, and protocol cash flow distribution. On the governance level, AAVE is the core governance token of the Aave DAO, allowing holders to participate in proposal discussions and voting, including ARFC. In terms of risk and reward mechanisms, AAVE functions as a security module to bear systemic risks of the protocol. According to the latest development directions, Aave is promoting the Umbrella module upgrade, introducing more refined risk pricing mechanisms, enabling stakers to share interest or fee income from V4 architecture and RWA-related businesses while providing security backing for the protocol. Additionally, in value capture, Aave has begun to routinely implement a “buy and distribute” strategy, whereby part of the protocol’s net income from lending activities is used to buy back AAVE on the secondary market and distribute to protocol contributors and stakers, establishing a more direct link between token value and the protocol’s real cash flow.

5. Competitive Landscape

Aave has long been regarded as one of the most mature and efficient governance protocols in DeFi. However, as the protocol’s scale, brand influence, and commercialization needs continue to expand, the organizational complexity within its governance framework has increased, revealing structural tensions. On one hand, the protocol’s value heavily depends on the consensus base formed by the DAO community, TVL, and network effects; on the other hand, key matters such as front-end operations, product iterations, compliance exploration, and institutional collaborations still rely heavily on specialized teams’ centralized decision-making and execution at critical nodes. This coexistence of decentralized governance and centralized execution, as the protocol matures, raises higher demands on the boundaries of responsibilities and authority. Based on current governance voting results, opposition votes dominate, with 32.85% abstaining, indicating the community has not fully accepted a relatively rushed governance approach to one-time, structural adjustments of front-end commercialization revenues and brand asset ownership.

From a competitive perspective, the current governance dispute in Aave contrasts with recent governance progress in Uniswap regarding protocol revenue and token value capture mechanisms. Uniswap has advanced the protocol fee switch through the UNIfication proposal, which, after DAO approval, reintroduces a portion of trading fees into the protocol for continuous UNI token burns and a one-time treasury token burn. This mechanism directly links UNI’s economic value to Uniswap’s actual trading volume and fee income, with the fee ratio, burn path, and implementation method all governed through governance processes, maintaining alignment of team and community interests. At a more fundamental level, this is not an isolated incident but reflects different approaches by leading DeFi protocols during their scale-up phase regarding token economics and protocol management. If Aave can develop similarly clear, executable, and institutionally constrained governance and revenue arrangements in this current game, its competitive advantage could be further strengthened; conversely, if governance disagreements remain unresolved over the long term, even if the protocol maintains technological and liquidity leadership, organizational and institutional uncertainties could gradually turn into competitive disadvantages.