$10M Aave Civil War: DAO Moves to Seize Control From Labs

 Aave DAO clashes with Aave Labs over revenue, brand control, and protocol ownership in what may be DeFi’s most explosive conflict yet.

Aave is tearing itself apart. And the crypto world is watching closely.

According to @obsrvgmi on X, the protocol faces a civil war. Two sides are battling for control. Aave Labs, the centralized entity founded by Stani Kulechov, stands on one side. The Aave DAO, representing token holders, stands on the other.

The conflict exploded into public view this month.

The Revenue Routing Controversy

On December 4, Aave Labs announced a partnership with CoW Swap. The goal was simple. Improve swap pricing and provide MEV protection on the Aave interface.

But seven days later, everything changed.

Delegate @DeFi_EzR3aL published onchain analysis on December 11. His findings were damning. Swap fees from the new CoW Swap contract were flowing to a private wallet. That wallet belonged to Aave Labs, not the DAO.

The implication hit hard. DAO revenue had been quietly redirected.

Marc Zeller, the largest delegate from Aave Chan Initiative, called it “stealth privatization” on December 12. According to Zeller’s estimate, approximately $10 million per year should go to the DAO. Instead, it’s gone.

Nuclear Proposals Shake the Protocol

December 16 marked the point of no return.

A proposal dubbed the “poison pill” emerged from Tulip King. The demands were aggressive. Seize all Aave IP, code, and brand assets. Force Aave Labs to become a DAO-owned subsidiary. Claw back all past revenue earned using the Aave brand.

Then came a second proposal. Former Aave Labs CTO @eboadom introduced “brand seizure.” His logic was straightforward. If the DAO pays for development and marketing, the DAO should own trademarks, domains, and social accounts.

Aave Labs pushed back immediately. The CoW Swap arrangement was never a fee switch, they argued. Frontend revenue was a voluntary donation from Labs. 

The company maintains it’s a private entity. The DAO owns smart contracts, not the website. Labs covers hosting, security, and frontend engineering costs.

Related Reading: SEC Ends Four-Year Investigation Into Aave Protocol

A Rushed Vote Sparks More Drama

On December 23, Aave Labs opened a Snapshot vote. The proposal would give AAVE token holders control over brand assets, domains, socials, GitHub, and npm packages. It was based on @eboadom’s earlier work.

However, @eboadom says he never approved it. According to him, the proposal was rushed to vote while discussions were still active. He called the move “disgraceful” and urged voters to abstain.

Zeller echoed concerns about timing. The vote launched during holidays, he noted. Fresh delegations gained voting power just before the snapshot.

The source suggests this fight transcends CoW Swap fees. It asks a fundamental question. Who actually owns a decentralized protocol? The code? The frontend? Or the brand?

Aave’s answer will set a precedent for all of DeFi.