The core asset of the Aave ecosystem, the AAVE coin, has witnessed a significant downturn over the past week, dropping by 18% and becoming the worst performer among the top 100 cryptocurrencies. While the broader market, including Bitcoin
$87,539.61
and Ethereum
$2,964.93
, remained stable with limited gains, AAVE’s distinct trend has sparked concern. The volatility in its pricing is attributed to governance uncertainties surrounding the control of the protocol’s brand and communication channels.
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Governance Crisis Pushing AAVE Behind in the Market
A governance dispute within Aave—a decentralized finance (DeFi) lending and borrowing protocol—has emerged as a key issue damaging investor perception. This debate, which became prominent last week, revolves around the management of the brand, domain names, and public communication channels.
The dispute, unfolding mainly on forums and social media, has intensified concerns over coordination and decision-making processes. Despite overall market stability, AAVE is suffering from deeper value losses, indicating that sell-offs are driven more by protocol-specific risks than macroeconomic conditions.
Selling Pressure, Whales, and the Founder’s Purchases
According to data from Onchain Lens, a blockchain tracking service, a major investor sold approximately 230,000 AAVE coins in a short time span on Monday. The sale, valued at around $35 million at current prices, reportedly shifted towards Ethereum derivatives and Bitcoin, causing approximately a 10% drop intraday and raising volatility.
The sales coincided with the governance proposal moving to a Snapshot vote, exacerbating the existing pressure. In contrast, blockchain tools linked wallets associated with Aave founder Stani Kulechov showing purchases during the decline. Reports suggest Kulechov accumulated roughly $12.6 million in AAVE over the last week at an average price of about $176, resulting in an unrealized loss of around $2.2 million with the price fall.
Although founders’ acquisitions are often seen as confidence signals, they failed to offset the selling pressure. Bitcoin’s stability around $90,000 and the absence of similar declines in major cryptocurrencies like Ethereum and XRP suggest that investors are not exiting the crypto market altogether but instead reducing positions in protocols suffering internal uncertainties. The open-ended nature of these governance disputes, coupled with a lack of a clear resolution timetable, complicates the “brand and interface gateways” issue that encompasses Aave DAO’s power usage outside the blockchain.
