$AAVE has dropped 18% in the last seven days, becoming the worst-performing asset in the Top 100. This is not a general market decline; it is an exclusive problem of Aave.
What is causing this drop?
It all boils down to a fierce governance struggle. There is an internal dispute over the control of the protocol's most valuable assets outside the code: its brand, its web domains, and its public communication channels.
Major investors do not forgive uncertainty. A single whale sold nearly 230,000 AAVE (about $35 million) last Monday, causing a flash drop of 10% in just one day. Stani Kulechov, the founder of Aave, has tried to calm the waters by buying about $12.6 million in tokens to show confidence. However, even his purchases have not been enough to stop the selling pressure. (The DAO is a Decentralized Autonomous Organization; an entity without bosses where token holders vote to decide the future).
The current conflict questions how the DAO can exert its power in the real world (outside of the blockchain), something that does not have an easy or quick solution.
Sometimes we focus only on the technology of a protocol, but we forget that there are people and political decisions behind it. The lesson with Aave is that power conflicts create an "open risk" without a solution date. The market can withstand bad news, but it hates uncertainty. When the captains of a project cannot agree on who holds the helm, major investors prefer to jump ship until the waters calm down.
Do you think a DAO should have total control over the web and the brand, or should those assets remain in the hands of the founders to avoid chaos?
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