AAVE Founder Calls for DAO Overhaul as Governance Cracks Widen

After a turbulent stretch inside Aave’s own governance apparatus, Kulechov went public with his critique of the standard “one token, one vote” model, calling current DAO processes “extraordinarily difficult” and arguing they’ve become breeding grounds for political maneuvering rather than productive development.

His proposed fix is blunt: keep tokenholders in the room for major calls – protocol upgrades, treasury allocation, risk parameters – but take execution-level decisions out of their hands entirely. Those, he says, belong with focused professional teams who can move without waiting weeks for forum debates and “temperature checks” to run their course.

A Governance System Under Strain

The context behind Kulechov’s comments matters. In the past year, Aave’s governance has been pulled in multiple directions at once.
BGD Labs, the team responsible for developing Aave V3, and the Aave Chan Initiative, one of the protocol’s most prominent contributors, both announced they were stepping back from the ecosystem. The reason cited: strategic disagreements with Aave Labs. Neither exit was quiet.

Fuel was added to the fire by a funding proposal – the so-called “Aave Will Win” initiative – seeking between $42.5 million and $50 million for protocol development. Critics questioned the transparency of the ask and raised concerns about voting power concentrated in wallets with ties to Aave leadership. The debate dragged on publicly and messily, exactly the kind of process Kulechov is now arguing against.

Then came the IP dispute. A proposal to transfer Aave’s brand assets and intellectual property to the DAO was rejected by tokenholders in December 2025. Kulechov responded by shifting course, announcing plans to distribute non-protocol revenue directly to $AAVE holders – a move framed as creating “economic alignment” between the protocol and its community.

The Numbers Behind the Problem

Average participation across DAOs sits somewhere between 15% and 25%, by most industry estimates. Kulechov points to that figure as a core driver of the centralization problem – low turnout means a small number of large holders end up determining outcomes by default.

In Aave’s case, that dynamic is quantifiable. Three wallets reportedly account for more than 58% of the protocol’s voting power. For an organization that markets itself on decentralization, that concentration is difficult to defend.

None of this has collapsed Aave’s position in the market. The protocol held over $26.5 billion in total value locked as of early March 2026, keeping it among the most significant players in decentralized finance. But governance friction at that scale is a liability, not a footnote.

Where the Industry Is Heading

Kulechov’s critique is landing at a moment when the broader DeFi sector is reassessing how DAOs actually function in practice. Analysts expect 2026 to bring wider adoption of modular governance frameworks and liquid democracy mechanisms – systems that allow token holders to delegate votes to trusted representatives rather than participating directly in every decision.

The revenue-sharing model Kulechov is advancing for Aave could become a reference point for other protocols wrestling with the same question: how to make governance participation worth the effort for the average holder.

His longer-term ambitions remain unchanged. Kulechov has maintained a consistent position that Aave is building toward becoming a core credit layer for the global onchain economy, with 2030 as a rough horizon for that vision.

Whether reformed governance gets him there faster – or just makes the internal politics quieter – remains to be seen.

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