Aave Chan Initiative (ACI), one of the most active governance delegates within the DAO, announced it will wind down operations over the next four months. The decision follows a disputed vote over a large funding proposal for Aave Labs. Despite the protocol’s strong position in decentralized finance, the token continues to struggle on the market.
Read also: Aave DAO Rejects Proposal to Transfer Brand Ownership
Funding Vote Sparks Exit
The conflict centers on the “Aave Will Win” proposal, which seeks to allocate up to $42.5 million in stablecoins and 75,000 AAVE tokens to Aave Labs under a DAO-funded development model. The Temp Check vote closed with 52.58% in favor, 42% against, and 5.42% abstaining. The proposal now moves to the Aave Request for Final Comment stage before a binding onchain vote.
ACI publicly opposed the structure of the funding package. The group raised concerns about transparency and voting dynamics, arguing that addresses linked to Aave Labs participated in voting on their own budget. According to ACI, this undermines the role of independent service providers within the DAO.
Founder Marc Zeller stated that ACI will complete its existing obligations, transfer infrastructure and responsibilities where possible, and submit a proposal to cancel its remaining GHO funding stream. The organization also plans to cut its AAVE vesting stream as part of the transition.
The departure follows another recent exit, as BGD Labs, a key development contributor, also announced plans to step away. Together, these moves have intensified debate around decentralization, governance standards, and the balance of power within the DAO.
We described the “Aave Will Win” proposal in detail in this article: Aave’s $50M Proposal Sparks Governance Debate
Technical Picture Remains Weak
While the governance situation unfolds, AAVE is trading near $111, down sharply over the past 24 hours and extending its broader multi-month downtrend. The token remains below its short-term moving averages and near the lower Bollinger Band, indicating high volatility.
Momentum indicators show mixed signals. RSI levels in the low 40s and a subdued Money Flow Index suggest fading bullish pressure, but not extreme oversold conditions. At the same time, an ADX reading above 30 reflects a still-strong prevailing trend.
The breakdown below the 78.6% Fibonacci retracement near $117 shifts focus toward lower support zones, with the full retracement level around $92 acting as a potential reference point if weakness continues.
Despite the issues, Aave remains one of the largest DeFi protocols, with roughly $26 billion in total value locked, representing a significant share of the sector’s overall deposits. Core protocol operations continue uninterrupted, but the governance dispute has shifted attention to internal decision-making processes.
