Aave Governance Rift Widens as ACI Confirms Exit Plan

TLDR

• The Aave Chan Initiative confirmed it will not renew its mandate and will wind down operations over four months.
• The dispute centers on a $51 million budget proposal submitted by Aave Labs for product development and V4 expansion.
• ACI said addresses linked to Aave Labs voted on the proposal and influenced the outcome.
• The proposal titled Aave Will Win passed its first formal vote with about 52% support.
• AAVE fell more than 11 percent in 24 hours following news of the exit.

A governance dispute has pushed a leading delegate group to exit Aave DAO. The Aave Chan Initiative confirmed it will not renew its contract. The decision follows a contested budget proposal from Aave Labs and marks another leadership change inside the $26 billion DeFi protocol.

Marc Zeller, founder of the Aave Chan Initiative, said the eight-member team will wind down over four months. He confirmed the group will continue governance work during the transition. He also said the team will transfer infrastructure and open-source its internal tools before departure.

The exit follows recent tensions inside the DAO. BGD Labs, which built the V3 codebase, also announced plans to step away. The two departures come within weeks of each other.

Aave Chan Initiative Withdraws After Disputed Budget Vote

Zeller said the group will not seek renewal of its mandate. He wrote that the DAO environment no longer supports independent oversight. He stated that addresses linked to Aave Labs voted on their own funding proposal.

The disputed proposal titled “Aave Will Win” requested about $51 million in stablecoins and 75,000 AAVE tokens. The plan seeks funding for product development, marketing, and Aave V4 expansion. The proposal passed its first formal vote with about 52% support.

ACI said it requested four conditions before backing the plan. These conditions included stricter onchain milestone tracking and limits on self-voting. Zeller said those requests went unanswered before the vote concluded.

In a governance forum post, the group wrote, “There is no role for an independent service provider” under current conditions. The group argued that undisclosed voting influence tipped the outcome. Aave Labs has not issued a public response.

Aave Token Drops as Wind-down Plan Begins

AAVE fell more than 11% in 24 hours and traded near $110. The token has declined by over 44% in the past year. Bitcoin has dropped about 24% during the same period.

ACI stated it drove 61% of governance actions over three years. The group said it helped deploy $101 million in incentives. It reported that Aave’s GHO supply grew from $35 million to $527 million during that period.

The group said the DAO paid $4.6 million for its services over three years. It will now submit a proposal to cancel its GHO funding stream. The plan transfers 120 days of funding to its treasury, while returning the rest.

ACI said it chose a lump sum because it does not trust the governance process to maintain its stream. After execution, it will cut its AAVE vesting stream. The group will step down from committee roles at the end of the transition.

Smart contracts continue operating across 20 blockchains. Chaos Labs, TokenLogic, and Certora remain active service providers. The DAO continues processing proposals under existing governance rules.