Haciyev Reşit 
Internal tensions have surfaced in Aave, one of the leading DeFi projects in the crypto market. Within the Aave ecosystem, debates between developers and the Foundation and Labs unit over fund usage, performance, and governance transparency have been intensifying. A newly released report has raised questions about the alleged underperformance of some products despite millions of dollars in funding. This growing friction in the Aave community is creating doubts about how DAO funds are utilized and how necessary new funding requests truly are.
Controversy Over Aave Labs’ Funding
A report released by Marc Zeller, founder of ACI, an organization contributing to the Aave ecosystem, revealed striking details about Aave Labs’ funding history. According to the report, Aave Labs has received roughly $86 million in total funding since 2017, including ICO proceeds, venture capital, and DAO grants. During the 2017 ICO, the founding team held 23% of LEND tokens, which were later converted to AAVE tokens at a 100:1 ratio. The report also notes that Labs had around $48.7 million in capital before receiving DAO funds and subsequently obtained approximately $37.4 million in grants from the DAO. Despite this, Labs requested an additional $51 million under the “Aave Will Win” proposal, sparking further debate within the community.
Product Failures Beyond Core Protocol
The most striking part of the report relates to the performance of products outside Aave’s core lending protocol. Allegedly, all six independent products developed outside the core protocol either failed or did not achieve the expected profitability. The Horizon project, focused on real-world assets (RWA), was highlighted. Although Horizon was said to exceed $1 billion in size at launch, it actually had about $135 million in RWA collateral, largely concentrated in a single asset. Launched in August 2025, the project reportedly generated only about $216,000 in DAO revenue, while incentives and costs reached $5.25 million, resulting in a roughly 24:1 negative return.
Developer Departures and Governance Issues
The report also mentions that early core developers involved in Aave V1, V2, and V3.0 left Labs between 2021–2022. These departures are claimed to have created a major disruption in the technical vision and product development process. V3.0, developed under Labs leadership, was the last major release; subsequent versions have been largely directed by DAO service providers and external teams. This has raised concerns that technical leadership within the project has gradually dispersed.
Additionally, the Horizon proposal’s approval heavily relied on a single large delegation address, raising questions about governance. Some community members argue that concentrating voting power in a few addresses undermines decentralization principles. The allocation of millions in funding by a limited number of large voters has once again brought fund efficiency and transparency into focus.
Transparency and Fund Management Debates in the Aave Community
These developments highlight how critical governance transparency and fund management are in DeFi projects. With $17.5 million in new grant proposals currently under consideration, debates within the community are expected to intensify. Analysts note that this internal tension could impact Aave’s perception and AAVE token price in the short term, but strengthening transparency and governance practices could make the ecosystem more resilient in the long run.
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