DeFi Lending and Borrowing Protocol The fight over Aave’s governance is starting to cost investors dearly.
The AAVE token is down about 18% over the past seven days, making it the worst performer among the top 100 cryptocurrencies, even as bitcoin, ether and other major tokens trade flat or slightly higher.
The selloff stands out in a market that has otherwise stabilized, suggesting the pressure is specific to Aave rather than a broader movement of risk aversion.
The drop follows a growing struggle within Aave’s governance over who controls the protocol’s branding, domains, and public channels, as CoinDesk reported early last week. While this debate has largely played out on forums and social media over the past week, traders appear to be reacting negatively to the uncertainty it has introduced around control, coordination and future decision-making.
Data tracked by blockchain detective Onchain Lens shows that large holders are acting decisively. A large holder sold about 230,000 AAVE — worth nearly $35 million at current prices — over a short window Monday, swapping the tokens for ether derivatives and bitcoin and triggering a sharp intraday decline of nearly 10%.
The move added to the selling pressure that had already been building since the governance proposal was put to a snap vote.
At the same time, Aave founder Stani Kulechov’s on-chain explorer-tagged wallets suggest he has embraced the decline.
Wallet data shows that Kulechov purchased around $12.6 million worth of AAVE over the past week at an average price of around $176, leaving him with an unrealized loss of around $2.2 million as the token continues to fall.
Founder purchases are often interpreted as a signal of confidence, but in this case they weren’t enough to offset broader sales.
Loading…
The divergence between AAVE and the rest of the market is striking. Bitcoin holds near $90,000, while Ether, XRP and other majors have avoided similar pullbacks. This contrast suggests that traders are not reducing crypto risks overall, but selectively reducing exposure to protocols facing internal uncertainty.
Unlike macroeconomic sell-offs, governance conflicts create unlimited risks.
There is no clear timeline for resolution, and the results may reshape how value flows through a protocol. In Aave’s case, the question of who controls the brand and front-end gateways is directly related to how the DAO exercises its power off-chain, a problem that does not lend itself to quick fixes.
