The governance dispute driving scrutiny and volatility
The dispute centers on allegations that a front-end integration change, replacing ParaSwap with CoW Swap, redirected roughly $10 million per year in swap fees away from the DAO treasury toward the development team’s control. This alleged revenue rerouting, alongside a parallel fight over brand ownership, has become a flashpoint between Aave Labs and the Aave DAO.
A separate controversial proposal, scheduled during Christmas week, sought to transfer domains, social accounts, and other brand assets from the development entity to the DAO, with critics arguing the timing could reduce participation. By placing governance decisions in a low-engagement calendar window, the proposal timing itself became part of the legitimacy debate. A DAO is a token-governed body that makes protocol decisions through collective voting. Taken together, the revenue-routing claims and brand-asset control proposal crystallized an ideological split between community delegates and the core development team.
Kulechov’s purchases became a focal point because they occurred immediately before the vote, potentially increasing his voting influence at a sensitive moment. The timing of concentrated buys ahead of a governance decision amplified concerns about voting power concentration and perceived fairness in the process. Reported on-chain figures cite a December 23 purchase of about 32,660 AAVE at an average price of $158 (≈ $5.15 million), contributing to a weekly total above 84,000 AAVE accumulated. These transactions were framed as increasing influence precisely when tokenholder outcomes were being decided.
I’m surprised that no one is talking about the fact that Stani bought $10M of AAVE, claimed it was bc he is aligned with the token yet in actual fact it was to increase his voting power in anticipation to vote for a proposal directly against the token holders best interests
This…
— Robert (@0xluude) December 23, 2025
Market response was immediate and negative across the week ending December 24. AAVE reportedly fell 10% to 18% over the period, including an 11% drop on December 22 from roughly $180 to $160. The drawdown was compounded by a liquidation of around 230,000 AAVE (≈ $37.6 million), which intensified downward pressure and lifted trading volumes as participants repositioned. In effect, governance uncertainty and mechanically forced selling reinforced each other. The combination of narrative risk and liquidation flow created a feedback loop that amplified price moves.
From a product and wallet UX standpoint, the episode highlights predictable friction under governance stress. When large token acquisitions can shift vote outcomes, tokenholders must interpret off-chain proposals, confirm on-chain actions under time pressure, and infer intent with limited interface cues, increasing the probability of user error and confusion. These conditions elevate usability risks such as unclear transaction state, repeated signature prompts, and complexity across wallet types and multi-sig workflows. For governance product teams, the case supports stronger disclosure flows, vote-timing safeguards that avoid low-participation windows, and dashboards that surface major balance changes alongside voting implications.
The episode shows how governance mechanics, front-end integrations, and proposal timing can directly influence token flows, price behavior, and perceptions of decentralization. In high-stakes votes, process design and information clarity can become just as market-relevant as the underlying proposal content.