However, I advise you not to follow the trend, the reason is...
The giant whale panic sells, and the founder confidently buys the dip; the magical drama of AAVE is unfolding.
Early this morning, a major earthquake occurred in the AAVE community. Apart from the project team, protocol contracts, and CEX, AAVE's second-largest whale holding, 'Brother 2 on the leaderboard', suddenly sold off 230,000 AAVE, worth about $38 million, causing AAVE to plummet 12% in the short term.
Dramatically, almost at the same time, AAVE founder Stani announced a $5 million investment to increase his holdings in AAVE, even though this investment has already incurred a loss of $2.29 million.
On one side, the giant whales are fleeing in panic, while on the other side, the founder is confidently buying the dip. This dramatic confrontation between bulls and bears is unfolding before our eyes.
01 Overview of events: What is happening internally in AAVE?
All these crises stem from what seemed to be a trivial change on the Aave front end on December 4th. Aave announced a partnership with Cow Swap to make it the default trading path for front-end exchange functions.
The problem is that this change has redirected fees that were originally supposed to flow to the Aave DAO treasury (approximately $10 million annually) to the address of Aave Labs' team. This 'almost unknown' change was discovered by community representative EzR3Ale and questioned in the governance forum.
When the community asked for an explanation, Aave Labs' response only added fuel to the fire. They stated that the front-end exchange function interface is completely operated and maintained by Aave Labs, so the revenue generated should belong to the team; the revenue that previously flowed to the DAO was merely 'donations, not obligations.'
This has triggered a core controversy: Who really owns the Aave brand?
02 Crisis escalation: from brand competition to giant whale liquidation
On December 16th, the contradictions further escalated. Aave's former CTO Ernesto Boado proposed to transfer the control of Aave's brand assets (including domain names, social accounts, etc.) to AAVE token holders.
This debate over brand control quickly ignited community sentiment. Although the proposal received a lot of support, Aave founder Stani voted against it, believing that the proposal 'would lead us in a direction unfavorable to the Aave ecosystem.'
As community sentiment continues to heat up, the 'whale liquidation incident' mentioned at the beginning of the article occurred. The giant whale's 230,000 AAVE was purchased at an average price of $223.4 and ultimately sold at $165, resulting in a loss of up to $13.45 million.
03 The logic and risks behind the AAVE founder's bottom-fishing
Faced with such a huge internal crisis, why does the AAVE founder still dare to invest $5 million in bottom-fishing?
From a fundamental perspective, AAVE indeed has capital to be proud of. As a monopolist in the DeFi lending market, its leading position remains solid. Even during market downturns, AAVE still maintains relatively robust revenue and buyback flow.
But the key issue is not the fundamentals, but trust. The founder's bottom-fishing may be based on the following judgment: the market has overreacted to this controversy, and AAVE's actual value has not been harmed; the team has the ability to reach a compromise with the community to resolve the power struggle.
However, this $5 million looks more like a gamble. The bet is that community sentiment will calm down, and the relationship between the team and the DAO can be repaired. But at present, it seems the risk is extremely high.
04 My view: Why do I recommend a cautious wait-and-see approach?
Although the founder has already shown his stance with real money, I still advise ordinary investors to remain cautious.
This dispute is not a simple price fluctuation, but exposes the structural governance contradictions of the Aave ecosystem. As the protocol matures and generates real substantial income, the issue of equity division between the team and the community comes to the forefront.
The case of Aave is not an isolated incident. The entire DeFi industry is experiencing the painful transition from the 'wild west era' to the 'institutional era'. The tension between the team and the community, centralization and decentralization is a question that every mature DeFi project must face.
In the current situation, investors need to pay attention to the upcoming ARFC snapshot vote regarding brand control in the Aave community. This will be a key barometer for measuring the balance of power between the community and the team.
05 Practical advice for ordinary investors
If you are still interested in AAVE, I have the following specific suggestions:
Maintain a light position for testing. Even if you want to enter the market, keep it within the range of losses you can bear to avoid a single bet on AAVE.
Set a clear stop-loss line. Do not be misled by the slogan of 'value investing'; in the face of a governance crisis, technical support is often very fragile.
As an analyst who has been in the crypto market for many years, I have seen too many 'high-quality projects' falter due to governance issues. The fundamentals of AAVE are certainly important, but the governance structure is the key to whether it can achieve long-term stability.
At the time of writing this article, Aave Labs has stated that it will initiate a community vote on the brand control proposal. The voting results will determine the future power structure of Aave. Whether founder Stani's $5 million bottom-fishing is confidence or arrogance will also be revealed.
This controversy exposes not only the issues of Aave but also the growing pains of the entire DeFi industry. When the ideal of 'decentralization' encounters the reality check of 'who really owns the project', every participant needs to make a choice.
Investing in DeFi is not only about betting on technology but also about betting on governance. In this sense, the crisis of AAVE is also a stress test to see if it deserves the title of 'decentralization'.
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