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- $51M proposal ignites fierce governance battle within Aave
- Audit challenges $86M funding history and transparency claims
- Horizon revenue and incentives spark sharp DAO scrutiny
A governance clash has erupted within Aave as a proposed $51 million funding request heads to Snapshot. The conflict escalated when the Aave Chan Initiative released an audit questioning Aave Labs’ financial history and performance. As a result, what was initially proposed as a funding proposal has evolved into a broader discussion of transparency and accountability across the DAO.
Previously, Aave Labs published a contribution report on its growth since 2017. The paper has followed the protocol’s development from the EthLend ICO to the current multi-chain format. It gave credit to Aave Labs by designing pooled liquidity, introducing Flash Loans, and implementing the Safety Module. It further emphasized the first V3 codebase and Efficiency Mode as fundamental milestones that were established before the DAO service-provider architecture began to grow.
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Funding History and Accountability Dispute
However, Marc Zeller of the Aave Chan Initiative denied this in a governance post. He claimed that the report lacked cost breakdowns and measurable returns. He said that tokenholders ought to consider what Aave Labs provided, the price it paid, and the value it delivered to the DAO over the long term.
The total capitalization of Aave Labs was brought close to $86 million as a result of the audit. That amount was based on ICO proceeds, venture capital funding, DAO payments, and swap-related revenues. Additionally, the report cast doubt on the undisclosed holdings of the founding team in AAVE. It also mentioned retaining 23 percent of the original LEND supply before migrating to AAVE.
Horizon Market and Governance Concerns
The heart of the criticism was Horizon, the real-world market for Aave’s assets. In allocating supply, the audit estimated that Horizon had a total supply of about $466 million. It said stablecoins accounted for approximately 69 percent, with the remaining 31 percent consisting of RWAs. Moreover, it purported to identify the concentration risk at three positions that accounted for over 50% of the activity.
Economic data also attracted attention, as the audit purported that Horizon made approximately $216,000 in DAO revenue. Meanwhile, the reported rewards were over several million dollars, one of them being Merkl rewards. Besides, the post expressed concern about theconcernabout the concentration of government ownershipgovernment and the possibility of transferring 5,000transferring AAVE tokens under the proposal.
