Under the ARFC proposal, does Aave still possess long-term investment value?

Recently, a governance dispute has arisen within the Aave community regarding the ownership of front-end commercialization revenue, triggering a renewed discussion on governance structure and business boundaries. In this round of governance disputes, after the development entity, Aave Labs, integrated CoW Swap into the application's front-end, the additional fees generated from related transactions flowed directly to addresses controlled by Labs, sparking controversy within the community regarding revenue transparency, brand asset ownership, and the boundaries of governance rights. To address this issue, the community formally proposed the ARFC (Advanced Administrative Committee for the Development of Aave) proposal, with the core demand being the clarification of the governance ownership of Aave's brand assets, requiring the unified transfer of intangible assets, including domain names, social media accounts, and the brand, to the DAO (Decentralized Ownership Organization) for management. Currently, the proposal has entered the Snapshot voting stage, with the voting window from December 23rd to December 26th, 2025. Current voting results show approximately 494,800 votes against, representing 64.15%. From the current voting structure, it is clear that the community still has significant disagreements regarding the direct transfer of brand assets to the DAO. The final outcome of this governance process will have a significant impact on how Aave establishes a stable balance between incentivizing the core development team, brand control, and the long-term interests of token holders.

1. Project Introduction

Aave is one of the largest and most mature decentralized lending protocols currently available. After years of iteration, Aave's TVL has exceeded $33 billion, representing approximately 60% of the DeFi lending market. Its core value lies not in a single lending product, but in building a non-custodial, permissionless on-chain liquidity market. In December 2025, the U.S. Securities and Exchange Commission (SEC) officially ended its years-long investigation into Aave without taking enforcement action. This development alleviated compliance uncertainty and promoted Aave's evolution from a DeFi protocol primarily serving crypto-native users to a more compatible on-chain financial infrastructure, setting a positive example for overall compliance expectations in DeFi. Aave founder Stani Kulechov recently outlined his three major strategies for 2026. First, the full rollout of Aave V4, unifying cross-chain liquidity through a Hub-Spoke architecture to break down funding barriers between different public chains. Second, the large-scale expansion of Horizon RWA. Horizon currently has net deposits of $550 million and plans to bring global asset classes such as US Treasury bonds, ETFs, and commodities onto the blockchain in 2026 through partnerships with institutions like Circle, Ripple, and Franklin Templeton, aiming to exceed $1 billion in assets. Third, the full-scale promotion of the Aave App, dedicated to transforming complex lending operations into a mobile savings application.

2. Market Dynamics

The ARFC governance proposal within the Aave community has sparked significant disagreement and quickly attracted market attention. Proposed by the former CTO of Aave Labs and current co-founder of BGD Labs, the proposal aims to systematically clarify the governance ownership of Aave's intangible assets, demanding that core assets, including domain names, official social media accounts, code repositories, and the "Aave" brand naming rights, be uniformly incorporated into the Aave DAO. The proposal's immediate background lies in community concerns that certain protocol fees and brand asset control arrangements were not authorized by the DAO, resulting in insufficient feedback of protocol commercialization revenue to the token system. This is seen by some holders as weakening the value of the AAVE token, and this issue has generated ongoing discussion in the governance forum. On December 22nd, before the community discussion had fully subsided, the proposal was directly pushed to a Snapshot-based off-chain vote, with the voting period set from December 23rd to December 26th. Because the voting window coincided with the Christmas holidays, several governance participants objected to the process, believing it could affect token holder participation and the quality of negotiated governance.

Based on the current voting progress and market feedback, this governance event has already had a substantial impact on short-term sentiment. As of now, approximately 494,800 AAVE tokens have voted against, accounting for 64.15%; approximately 253,400 have abstained, accounting for 32.85%; and approximately 23,200 have voted in favor, accounting for 3.01%. This indicates significant disagreement within the community regarding whether brand assets should be directly transferred to DAO control. During the voting process, clear risk-averse behaviors have also emerged on-chain. On December 22nd, a long-term AAVE whale address sold 230,000 AAVE tokens in batches, converting the funds into stETH and WBTC. The price of AAVE briefly corrected by about 10%, hitting a low of $156. However, the market generally interprets this sell-off as a temporary risk aversion to governance uncertainty, rather than a rejection of the fundamentals or long-term competitiveness of the Aave protocol.

3. Team Background

Founded in 2017, Aave's founder and CEO, Stani Kulechov, is one of the earliest entrepreneurs in the DeFi space to systematically build on-chain financial infrastructure. Stani has extensive entrepreneurial experience in the crypto and fintech sectors and has been actively involved in DeFi ecosystem development. At several key junctures, he elaborated on the protocol's long-term positioning and development direction, including V4 architecture upgrades, the development of institutional lending capabilities, the integration of RWA, and application layer deployment for a wider user base.

At the execution level, the protocol's technical research and development and product advancement are primarily undertaken by Aave Labs. This entity is responsible for the development, upgrades, testing, and ecosystem expansion of core contracts, emphasizing open source, modularity, and composability in its design philosophy. Meanwhile, Aave's governance and strategic direction are not determined unilaterally by Labs, but rather by the Aave DAO as the governance body, coordinating and adjudicating through on-chain and off-chain governance processes. The Aave DAO, composed of token holders, is responsible for voting on major parameter adjustments, fund usage, protocol upgrade directions, and brand-related matters. Regarding the division of labor and responsibilities among the Aave DAO, Aave Labs, and the broader community, the protocol has formed an operational framework with the DAO as the governance body and Aave Labs as the execution body. The recent ARFC proposal is precisely a governance discussion centered around certain asset and licensing issues within this framework.

4. Token Information

Aave's native token, AAVE, has a total supply of 16 million, with approximately 15.19 million currently in circulation. The circulating supply is nearing its limit, limiting further inflation and resulting in a relatively stable supply structure. In this context, AAVE's value depends more on its functional role in governance, risk-taking, and protocol cash flow distribution. At the governance level, AAVE is the core governance token of the Aave DAO, allowing holders to participate in proposal discussions and voting, including in ARFC. Regarding risk and reward mechanisms, AAVE assumes systemic risk management through its security module. According to recent developments, Aave is upgrading its Umbrella module to introduce a more refined risk pricing mechanism, allowing stakers to share in interest or fee income from the V4 architecture and RWA-related businesses while providing security guarantees for the protocol. Furthermore, in terms of value capture, Aave has begun to routinely implement a "buy and distribute" strategy. This involves using a portion of the net revenue from lending operations to buy back AAVE on the secondary market and distribute it to protocol contributors and stakers, establishing a more direct link between token value and the protocol's real cash flow.

5. Competitive Landscape

Aave was long considered one of the representative protocols in the DeFi field with a relatively mature governance structure and high execution efficiency. However, as the protocol's scale, brand influence, and commercialization needs continue to expand, the organizational complexity of its governance framework has increased, and the original model has gradually revealed structural tensions. On the one hand, the protocol's value is highly dependent on the consensus foundation, TVL, and network effects formed by the DAO community; on the other hand, important matters such as front-end operations, product iteration, compliance exploration, and institutional cooperation still highly rely on the centralized decision-making and execution capabilities of specialized teams at key nodes. This structure, which combines decentralized governance and centralized execution, places higher demands on the existing boundaries of rights and responsibilities after the protocol enters a mature stage. However, judging from the results reflected in the current governance vote, dissenting opinions dominate, and abstentions account for 32.85%, indicating that the community does not fully agree with making a one-time, structural adjustment to front-end commercialization revenue and brand asset ownership in a relatively hasty governance manner.

From a competitive perspective, Aave's current governance controversy contrasts with Uniswap's recent progress in governance regarding protocol revenue and token value capture mechanisms. Uniswap has advanced the implementation of a protocol fee switch through the UNIndication proposal. After the DAO vote, a portion of transaction fees will be re-introduced into the protocol system for the continuous burning of UNI tokens , along with a one-time treasury token burn. This mechanism directly links the economic value of UNI to the actual trading volume and fee revenue of the Uniswap protocol, and the relevant fee ratios, burn paths, and execution methods are all handled through governance processes, maintaining consistency between the team and the community's interests. At a more fundamental level, this is not an isolated incident, but rather a reflection of different solutions for token economics and protocol management by leading DeFi protocols during the scaling phase. If Aave can establish a similarly clear, enforceable, and institutionally binding governance and revenue arrangement in the current game, its competitive advantage is expected to be further consolidated. Conversely, if the governance disagreements remain in a state of unclear responsibilities, even if it maintains a lead in technology and liquidity, the uncertainty at the organizational and institutional levels may gradually translate into a competitive disadvantage.