Aave Founder Facing Accusations Over Governance Manipulation After $10M Token Purchase

Aave founder Stani Kulechov is under scrutiny following a significant $10 million purchase of AAVE tokens right before an important governance vote. Critics argue that this move was less about supporting long-term token holders and more about increasing Kulechov's influence over the vote, raising concerns about governance systems in decentralized finance (DeFi).

Key Takeaways

Stani Kulechov purchased $10 million in AAVE tokens before a key governance vote, sparking accusations of a "governance attack."
Critics believe this purchase was aimed at increasing Kulechov's voting power rather than showing support for token holders.
Governance disputes within Aave have surfaced, raising questions about power dynamics and transparency in the protocol.
Recent actions by Aave Labs have drawn criticism from community members worried about the management of brand assets and potential conflicts of interest due to large token holders dominating voting power.

Aave Founder Accused of ‘Governance Attack’ After $10M Buy Before Crucial Vote

Concerns Raised Over Governance Structure

Aave founder Stani Kulechov is currently facing criticism from segments of the cryptocurrency community due to a recent $10 million purchase of AAVE tokens made just before an important governance vote.

Critics have suggested that this transaction was primarily designed to enhance Kulechov’s voting power rather than demonstrate a genuine commitment to the interests of other token holders.

The allegation gained traction this week after Robert Mullins, a strategist focused on decentralized finance and liquidity, expressed on X that Kulechov’s purchase seemed strategically timed to sway the outcome of an upcoming vote.

This situation highlights potential vulnerabilities in token-based governance models, where large stakeholders can rapidly gain influence without making long-term investments. Mullins raised questions about whether governance systems that require token lock-ups could prevent such behavior.

Aave's Governance Issues Highlight Power and Transparency Concerns

The sentiment regarding these governance challenges was echoed by notable crypto user Sisyphus, who pointed to blockchain data indicating that Kulechov may have liquidated millions in AAVE tokens between 2021 and 2025.

While no wrongdoing has been confirmed, critics are questioning the economic logic behind selling significant amounts over time before making a major purchase ahead of a contentious vote.

This debate is taking place amid broader governance conflicts within the Aave ecosystem about who controls the protocol's branding and related assets.

On December 22, Aave Labs presented a proposal on Snapshot regarding ownership of essential brand assets, including the aave.com domain, social media accounts, GitHub organizations, and naming rights.

Authored by Ernesto Boado, co-founder of BGD Labs, the proposal faced pushback when Boado publicly disavowed the decision to move it to a vote, stating he was unaware and did not support the submitted version.

He argued that this action breached trust during what he deemed a constructive discussion about the proposal, which aimed to shift brand assets into a decentralized autonomous organization (DAO)-controlled legal framework designed to protect against capture.

Rising Tensions Over Brand Use and Voting Dynamics in Aave

The initiative emerged amid growing worries from contributors that brand assets were being utilized to benefit private products, leaving the DAO as a secondary beneficiary.

Critics cited examples like Aave Labs’ decision to replace Paraswap with CowSwap, an alteration expected to divert approximately $10 million annually in fees away from the DAO, and the launch of the Horizon market, which generated around $100,000 in revenue but utilized roughly $500,000 in DAO incentives.

Marc Zeller from the Aave Chan Initiative commented that the DAO has effectively funded these assets multiple times through the original LEND token sale, dilution, liquidity mining, and service provider fees.

Kulechov defended the expedited vote, mentioning that discussions had previously occurred and that presenting proposals outside of longer processes was not unusual. He maintained that the final decision should be made through the voting process.

However, various observers, including crypto educator Duo Nine, voiced concerns over potential conflicts of interest when founders maintain influence through private ventures while also shaping DAO decisions.

Data on voting trends has contributed to the ongoing discussion, with Samuel McCulloch from USD.ai noting that a small number of substantial token holders possess a significant portion of the voting power.

Snapshot data reveals that the three largest voters command over 58% of the voting rights, with the biggest wallet alone holding more than 27%.

Voting Data

The situation has emerged amidst a backdrop of alleviated regulatory scrutiny for Aave.

On December 16, Kulechov revealed that the U.S. Securities and Exchange Commission concluded its extended investigation into the protocol without recommending any enforcement actions, bringing nearly four years of uncertainty to a close.

Additionally, Aave Labs has obtained authorization under the EU's Markets in Crypto-Assets (MiCA) regulation and is preparing for the launch of Aave V4.