AAVE Price Slides 10% as DAO Governance Dispute Triggers Sell-Off

The price of AAVE fell by over 10% during Monday's Asian session, trading around $159.86, due to a significant sell-off triggered by governance tensions. The controversy stems from allegations that Aave Labs, led by founder Stani Kulechov, diverted millions in swap fees from the DAO treasury without token holder approval. Specifically, critics claim integrating CowSwap over ParaSwap redirected up to $10 million in potential annual revenue away from the DAO, as the ParaSwap integration reportedly generated about $200,000 weekly for the DAO.

In response to the community outcry, Stani Kulechov moved a DAO alignment proposal to Snapshot for a formal vote. This proposal aims to transfer key brand assets, including domains and social media handles, from Aave Labs to the DAO. Kulechov urged token holders to vote to resolve the discussion, but market confidence remains low, with Polymarket odds suggesting only a 25% chance of the proposal passing.

The incident underscores broader challenges in DAOs regarding aligning incentives between developers and token holders. Some analysts suggest Aave should emulate models like Hyperliquid, where nearly all revenue is used for token buybacks. The outcome of the three-day Snapshot vote is crucial, as it could set a significant precedent for Aave's governance transparency and the DeFi ecosystem.

(Source：BeInCrypto)