I saw this news earlier and it’s quite concerning for the Aave ecosystem. The Aave Chan Initiative has appeared within the DeFi lending protocol with a value of $27 billion due to a governance conflict that can no longer be resolved. Marc Zeller, the founder of ACI, announced on Wednesday that they would stop operations for four months.

The root cause of the issue is pretty serious. Aave Labs, the main development team, apparently secured the largest budget in DAO history, but they also hold control of the voting power. For Zeller, it’s impossible for an independent service provider to work under this kind of setup. There’s no transparency and no checks and balances in governance.

But this is only the beginning of the problem. Last week, BGD Labs—the developer team that built Aave V3—also surfaced. The AAVE token itself fell by 6% on February 20 after their announcement. Now the current price has reached $95.99, so it’s somewhat stable, but sentiment in the community is still shaky.

The real conflict is about control of the protocol. In December, the community proposed transferring all of Aave’s intellectual property assets to the DAO—social media accounts, the website, everything. That proposal failed. Then Aave Labs counter-proposed transferring only the revenue from branded products to the DAO, but included a statement that V4 is the only “official foundation” for future development. In other words, they’re planning to abandon V3 and force users to migrate to V4—an alarming red flag for BGD Labs and the entire DeFi community.

The most worrying part is why they want to discontinue V3. This is a stable, tested version of the codebase, but V4 hasn’t been fully audited yet. Forcing that migration could be risky for users.

Zeller told DL News that he’s just waiting to see what BGD Labs will do next. If they build their own protocol, he’ll join. But for now, he needs time for a smooth transition. This Aave governance crisis is definitely a watershed moment for DeFi—showing how DAOs should be structured so they can’t be captured by a single entity.