Report: Aave Power Struggle Triggers $500M Market Cap Slide

Aave’s governance token reportedly misplaced half a billion {dollars} in market worth in mid-December 2025 as a public battle between its decentralized autonomous group (DAO) and the core improvement group, Aave Labs, rattled buyers.

The dispute, detailed in a January 14 report by market intelligence supplier Santiment, centered on management of key income streams and model belongings and has advanced right into a vital check for decentralized governance. However, on-chain information reveals that giant buyers used the panic as a shopping for alternative.

Governance Clash Shakes Confidence, Then Steadies

According to Santiment, the strain traces again to early December, when DAO members noticed that swap charges tied to a brand new CoW Swap integration on Aave have been being routed to an handle managed by Aave Labs slightly than the DAO treasury.

Previously, related charges had flowed to token holders, creating expectations round shared upside. However, Aave Labs defended the change as income from a product it funded independently, inflicting the disagreement to shortly develop right into a broader debate over governance rights, worth seize, and management of the Aave model.

Discussion peaked between December 11 and December 22, 2025, as proposals emerged in search of to maneuver Aave’s mental property and branding belongings underneath DAO management. The vote, pushed to Snapshot in the course of the vacation interval, drew criticism for timing and course of, with main market individuals, together with Wintermute, publicly opposing the alignment plan. Wintermute CEO Evgeny Gaevoy wrote on December 26 that the proposal lacked readability and risked deepening political infighting slightly than fixing long-term incentives.

As uncertainty unfold, AAVE’s value slid about 15% at its worst level, contributing to the roughly $500 million drop in market capitalization. Still, Santiment famous that fundamentals stayed agency, with deposits on the protocol going up round 60% yr over yr and weekly income reaching file ranges in late 2025.

Whale Accumulation and Price Action Point to Cautious Optimism

While retail curiosity cooled in the course of the dispute, giant holders moved the opposite means. Data cited by Santiment reveals the highest 100 AAVE addresses lifting their share of provide from about 72% to 80% by way of December. Exchange balances additionally fell, an indication that tokens have been being pulled into long-term storage slightly than ready on the market.

Meanwhile, whale transaction counts stayed muted, suggesting regular accumulation as a substitute of frantic buying and selling. That shift coincided with a change in tone in early January, after Aave Labs mentioned it will discover sharing income generated exterior the core protocol with token holders.

Sentiment metrics tracked by the analytics platform flipped extra optimistic by January 13, 2026, reaching their strongest bullish-to-bearish ratio since earlier than the dispute.

Price motion can also be reflecting that stabilizing temper. At the time of writing, AAVE was buying and selling round $178, up practically 5% within the final 24 hours and simply over 4% on the week, though it stays down greater than 9% over the previous month and 38% yr over yr.

For many long-term holders, the saga has change into a stress check slightly than a breaking level, and with Aave Labs outlining an bold 2026 roadmap and governance talks nonetheless ongoing, the approaching months will present whether or not this uneasy truce turns right into a clearer mannequin for energy and revenue within the DeFi protocol.

The put up Report: Aave Power Struggle Triggers $500M Market Cap Slide appeared first on CryptoPotato.