Aave-Chan Initiative’s Marc Zeller took to the governance forum to criticize Aave Labs in light of its latest funding request.
The dispute between Aave Labs and the Aave DAO appears to be escalating, with DAO delegates ramping up their hostility after Labs’ “Aave Will Win” proposal requested another $51 million in development funding from the DAO.
On Feb 20, delegate BGD Labs announced its intent to halt its work with the DAO due to Labs’ focus on Aave V4 rather than “a very mature and successful V3.” The decision came after Aave Labs co-founder Stani Kulechov stated in the proposal that “Once V4 is mature, V3 parameters should be gradually adjusted to encourage migration, following the same approach used in past version transitions.”
Marc Zeller, the founder of Aave-Chan Initiative (ACI), another service provider to the Aave DAO, called BGD’s impending departure from the DAO a major change and sold a portion of his AAVE holdings.
Today, the feud between the DAO and Labs was cranked up a notch after Zeller published a full audit of Labs’ performance in the Aave governance forum, bashing Aave Labs’ product delivery, profitability, and business development (BD).
Zeller referred to Labs’ standalone products, including Lens Protocol, GHO v1, and Horizon, as “The Product Graveyard,” citing “zero successes.” He went on to point out that even its more successful launches, such as Horizon, which has commanded over $500 million in total value locked (TVL), still resulted in a negative 96% return on investment (ROI), and that Aave’s stablecoin, GHO v1, depegged and had to be rebuilt by BGD and TokenLogic.
The report went on to criticize Aave Labs’ BD department, noting that Labs was set to work with prominent entities in DeFi and traditional finance like Coinbase’s Layer 2 Base, World Liberty Financial, Apollo, and Mantle.
Morpho emerged as the most notable competitor in these relationships and now serves as the backend of Coinbase’s decentralized lending product, and recently announced a partnership with $800 billion asset manager Apollo Global Management.
While the relationship between the DAO and Labs continues to crack, Aave remains DeFi’s leading protocol by TVL, accounting for more than 28% of the DeFi market with $27.5 billion across all chains.
Meanwhile, Morpho is the second largest lending protocol and sixth largest in DeFi with $5.8 billion.
Despite Aave’s leading position in terms of TVL and brand recognition, its native AAVE token is trading near multi-year lows at just $122, or a $1.9 billion fully diluted valuation, after reaching as high as $380 in December 2024 and $660 in 2021.
Aave Labs did not respond to The Defiant’s request for comment.