Haciyev Reşit 
One of the notable altcoins in the crypto market, Aave (AAVE), faced strong selling pressure following a major development on the governance side. BGD Labs, one of the core technical contributors to the decentralized finance (DeFi) protocol, announced that it would part ways with Aave DAO after nearly four years of collaboration. Following the announcement, AAVE’s price dropped sharply, while investor concerns regarding the project’s governance and future intensified. The decision by BGD Labs reignited discussions around governance structure and decentralization within the Aave ecosystem.
BGD Labs Ends Its Partnership with Aave
As one of Aave’s key technical developers, BGD Labs stated in its official announcement that its current service agreement will expire on April 1, after which it will step down from its active role in the project. The firm has played a central role in Aave’s technical infrastructure and development processes for nearly four years. BGD Labs noted that it had informed the community in advance to ensure a smooth transition and will continue fulfilling its responsibilities until the contract concludes. The company will support the completion of ongoing projects such as Aave v3, the Umbrella security system, chain expansions, and new asset integrations. It also announced that comprehensive documentation and maintenance guides will be published to facilitate a seamless handover of ongoing technical work.
Founded in 2022, BGD Labs played a significant role in building and maintaining Aave’s technical backbone. The firm was particularly instrumental in the development and ecosystem integration of Aave v3, which it described as the “crown jewel” of the ecosystem. BGD Labs also emphasized its active involvement in establishing the protocol’s governance infrastructure, operational procedures, and security mechanisms. Although the company stated that Aave’s core systems are now strong and sustainable, it cited organizational changes as the reason for ending the partnership.
Reason for the Split: Governance and Decentralization Debate
The decision by BGD Labs is reportedly tied to recent organizational changes and differences in governance structure within the Aave ecosystem. In particular, Aave Labs preparing to take on a more centralized and decisive role in the development of Aave v4 has been highlighted as a key factor. Aave Labs recently proposed directing 100% of the protocol’s revenues to the DAO treasury and requested additional funding for development activities. These proposals triggered significant debate within the ecosystem, making disagreements over DAO governance and resource allocation more visible.
BGD Labs argued that the new structure could create an “asymmetric organizational scenario” and pose potential risks to the principle of decentralization. According to the firm, concentrating brand power, communication channels, and governance voting influence within a specific structure may contradict the distributed, community-driven philosophy that underpins DeFi projects. It also warned that reducing the influence of independent contributors in decision-making processes could weaken long-term motivation among developers and technical teams.
Following the announcement of the separation, AAVE’s price experienced a sharp pullback. The market interpreted the departure of one of the core developer teams as a governance risk, increasing uncertainty and selling pressure among investors. Since changes in technical teams and governance structures can directly impact prices in DeFi projects, this development led to heightened short-term volatility and downward price movement for AAVE.
Tensions During the Aave v4 Process
In its statement, BGD Labs also mentioned that the development process of Aave v3 was occasionally contentious and that sufficient collaboration did not materialize during the design phase of Aave v4. The company claimed that contributors were reduced to advisory roles without being fully involved in incentive and design processes. Arguing that this setup does not offer a sustainable long-term working model, BGD Labs described its departure as a strategic decision. The exit of one of Aave’s core technical contributors has created significant impact within the DeFi market. The sudden drop in AAVE’s price has made investors more cautious about the project’s governance and future direction. In the coming period, the steps taken by Aave’s leadership and community will be decisive for both the protocol’s development and AAVE’s price performance.
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