The governance controversy between Aave DAO and Aave Labs led to whale number $AAVE selling all of its 230,350 $AAVE holdings, exchanging them for 5,869.46 $stETH and 227.8 of $WBTC , with a total value of approximately 37.59 million to 38 million USD.

This large sell-off caused the price of $AAVE to plummet by about 10% in the short term, with the whale suffering a loss of approximately 13.75 million USD (costing about 223 USD per token).

Whale number 2's wallet address: 0xa923b13270f8622b5d5960634200dc4302b7611e

💻 The situation arose from the past where the underlying for AAVE was ParaSwap; a portion of the fees drawn from Paraswap would be returned to AAVE's DAO. Later, Aave Labs replaced the original ParaSwap with CoW Swap. The original ParaSwap integration generated about 200,000 USD in fees weekly, which was donated to the DAO treasury. After the switch, this annual fee of over 10 million USD was redirected to a private wallet controlled by Aave Labs.

DAO members exposed this matter on the governance forum, accusing Labs of "stealth privatization" of the protocol's value, arguing that although the front end is maintained by Labs, the brand and traffic come from the development, incentives, and community trust funded by the DAO.

Labs responded that the revenues from the front end and product layer belong to the company and are unrelated to the core protocol (governed by the DAO), stating that this is a long-standing practice aimed at improving user experience, which ultimately led to major holders angrily dumping their AAVE chips, resulting in the significant drop of $AAVE .