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The Aave Chan Initiative (ACI), one of the most influential governance groups within the Aave DAO, has announced it will shut down following a dispute over transparency and voting power tied to a record-breaking budget proposal from Aave Labs. The decision marks a significant shift for Aave, the leading decentralized finance (DeFi) protocol, which currently holds nearly $27 billion in total value locked (TVL) across 20 blockchains.
Marc Zeller, founder of ACI, confirmed that the eight-member team will not renew its contract and will gradually wind down operations over the next four months. During this transition, ACI will continue participating in Aave governance while open-sourcing its tools and transferring infrastructure to the DAO.
The controversy centers on a proposal titled “Aave Will Win,” in which Aave Labs requested approximately $51 million in stablecoins and 75,000 AAVE tokens to fund Aave V4 development, marketing, and ecosystem expansion. The proposal also included directing revenue from Aave-branded products back to the DAO. It passed its initial vote with roughly 52% support. However, ACI argued that wallet addresses linked to Aave Labs participated in the vote, potentially influencing the outcome.
ACI had requested stricter onchain milestone tracking and limits on self-voting from affiliated addresses before backing the proposal. According to Zeller, those conditions were not addressed. In a governance forum post, ACI stated that the situation raises concerns about decentralization and independent oversight within the Aave DAO.
Over the past three years, ACI claims it drove 61% of governance actions and helped deploy $101 million in incentives, while costing the DAO $4.6 million. During that period, the GHO stablecoin supply grew from $35 million to $527 million, and Aave’s DeFi market share surpassed 65%.
Following the announcement, the AAVE token dropped more than 11% in 24 hours to around $110, extending its yearly decline to over 44%, compared to Bitcoin’s 24% drop.
Despite the governance shake-up and the recent departure of BGD Labs, Aave’s lending and borrowing services remain fully operational. Still, the exits of two key contributors may reshape how the DAO approaches risk management, budget approvals, and long-term protocol upgrades.
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