Control Dilemmas: How Aave's Debate Today Reveals Tensions in Protocol Governance

Crypto doesn’t like to share power. The past few weeks have been a live lesson on what happens when a decentralized autonomous organization (DAO) and a private development company can’t agree on who truly “owns” the protocol.

Aave, a network with over $33 billion locked in its contracts, has faced just such an identity crisis. The dispute revolves around a fundamental question: should the rights to the brand, domain, social media accounts, and distribution belong to Aave Labs (the team behind the code and infrastructure), or to the DAO — meaning the token holders who actually keep the protocol running?

What sparked the debate?

It all started with an integration with CoW Swap. The transaction execution tool directed swap fees directly to Aave Labs instead of the DAO treasury. Theoretically: companies need to make money. Practically: this revealed deep uncertainty about who ultimately controls the protocol’s assets and revenues.

This debate today extends far beyond Aave itself. It concerns the fundamental conflict of every crypto project: who should hold the power — the team building the technology or the community maintaining its value?

Half the world thinks Labs is right

Supporters of Aave Labs argue a simple fact: without operational autonomy, the protocol won’t move forward. Nader Dabit, a former Labs employee, hits the nail on the head: decentralized organizations structurally cannot deliver competitive software. Every product decision requires voting. Every opportunity appears and disappears in forum threads, while competitors are already implementing it.

George Djuric from KPMG goes further: forcing Labs to operate under a grant model turns engineers into politicians. Innovations fade into the vacuum of consensus. Supporters of this side also argue that revenue at the interface level funds ongoing development — which truly strengthens the entire ecosystem rather than weakening it.

They also emphasize: entering partnerships with traditional finance requires a recognizable legal entity. Something a DAO will never be.

The other half says: bad structure, bad results

Supporters of the DAO do not deny the role of Labs. However, they say: real power has already shifted. It is the DAO that makes decisions about updates. It is the DAO that funds innovations through grants to creative teams. Ultimately, it is the DAO that bears market risk.

Marc Zeller, a long-time architect of Aave, sees the matter clearly: the DAO has become a “risk management and revenue-generating engine,” and the brand assets are simply a “storefront.”

The problem? A private company controls the storefront, while the community maintains the engine. Most of Aave’s growth comes from independent teams funded and overseen by the DAO — but the DAO has limited leverage over how this brand and its revenues are used.

Louis Thomazeau, an investment partner, called this “the most important debate today regarding token holder rights.” It’s not just about Aave. It’s about whether token holders will have real authority or merely be passive investors.

Where is the consensus?

Somewhere else. According to the latest voting results, about 58% of participants oppose transferring brand assets to the DAO, and about one-third abstained. The vote ends on Friday.

But the numbers don’t tell the whole story. Rushkin from Messari notes: if Labs leaders think the community is “tired” of the token holder rights discussion — they are misreading market signals.

This debate today will shape the future not only of Aave but of the entire crypto governance model. Will DAOs be real authorities or just a spectacle for the audience? Aave’s answer could influence the entire industry.