Recapping the Aave Token Controversy: Perhaps the Riskiest Proposal in Project History
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Recapping the Aave Token Controversy: Perhaps the Riskiest Proposal in Project History
New coin airdrops only 2% to AAVE stakers... amid community outrage, founder forced to compromise.
Navigating Web3 tides with focused insightsAuthor: Azuma, Odaily Planet Daily
Over the weekend, the Aave community experienced an extremely intense debate.
The two sides were Aave Labs—the core development team led by founder Stani Kulechov—and a community faction represented by Marc Zeller, a prominent figure in the Aave DAO.
The debate centered on a controversial new proposal: whether a new token should be issued alongside the existing AAVE token. Ultimately, amid strong community opposition, Stani announced the temporary suspension of this proposal.
Origin: A Proposal With Hidden Agendas
The incident traces back to March 13, when Aave Labs published a draft proposal on the governance forum, introducing a new initiative called Horizon. The plan aims to expand Aave's business into the currently underdeveloped RWA (real-world assets) sector. Horizon envisions enabling institutions to use tokenized money market funds (MMF) as collateral to borrow large amounts of USDC and GHO, thereby unlocking stablecoin liquidity and increasing institutional access to DeFi.
At first glance, the proposal seemed reasonable and even beneficial for Aave’s growth. However, the controversy stemmed from a hidden component: the introduction of a new token specifically for the Horizon project.
Aave Labs proposed that only 15% of the new tokens would be allocated to Aave DAO, distributed as follows:
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10% to the Aave DAO treasury
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3% reserved for Aave ecosystem incentives
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2% airdropped to stkAAVE holders—meaning that existing AAVE stakers (not just holders) would receive only 2% of the new token supply
In addition, Horizon would share a portion of its profits with Aave DAO according to the following schedule:
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Year 1: 50%
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Year 2: 30%
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Year 3: 15%
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Year 4 and beyond: 10%
Clearly, under Aave Labs' initial design, Horizon would provide high profit-sharing ratios only during its early, limited-scale phase, gradually reducing these shares as the business grows.
Escalation: Community Outrage and Unified Opposition
It was no surprise that the Aave community—largely composed of token holders—strongly opposed this value-diluting proposal.
As soon as the draft was released, it sparked widespread backlash across the community. Numerous users began commenting on the forum post, many registering for the first time solely to voice their dissent. Nearly all responses expressed firm opposition.
Community member gregrwalsh commented:
"I don’t understand why we need to dilute the AAVE token. If a new token is required for some reason, it should maintain a 1:1 relationship with AAVE, so holders receive proportional allocations. Moreover, the revenue share going to Aave DAO is decreasing. This clearly indicates Aave Labs is planning to build a separate entity. I oppose this proposal."
Community member Apu Mallku stated:
"This appears to be a cash grab by Aave Labs. It’s deeply disappointing for long-term AAVE holders."
Community member sreno added:
"If Horizon is meant to be an Aave DAO initiative, then value should accrue to Aave DAO and the AAVE token—not just 15% of a new token. Aave DAO should retain full control and ownership over Horizon… The structure of this proposal reeks of VC influence."
Community member knew drew a comparison with Maker:
"I strongly oppose the new token proposal. Just look at what happened after MakerDAO upgraded to sky.money and issued a new token—MKR has been declining ever since and will likely continue to fall. This creates confusion among investors and damages the community. Aave faces fierce competition; if token holders leave and AAVE’s price remains depressed, we’ll lose market share."
Another user, zzzzz, reacted more drastically:
"I’ve sold all my AAVE. Even if this proposal gets rejected later, the mere fact that Aave Labs dared to suggest such an absurd idea is incomprehensible—it’s outright betrayal. This isn’t just reckless; it’s a shameless act of plunder, revealing their intent to exploit the community for personal greed…"
More opposing views can be found in the original thread.
Climax: Leadership Splits
As the community voiced clear opposition, Marc Zeller—the public face of Aave DAO governance and founder of Aave Chan Initiative (ACI)—publicly declared his stance against issuing a new token, asserting that Aave should have only one token: AAVE.
Marc Zeller noted that Aave Labs must have anticipated the backlash but chose to publish the proposal anyway. He suggested that the extreme allocation terms were part of a familiar "negotiation tactic"—proposing an intentionally unreasonable version of a plan to make the original, more moderate version appear acceptable by comparison.
Zeller concluded that the proposal wasn't even worth considering, stating ACI’s firm opposition and urging every community member to speak out.
Under mounting pressure, founder Stani was forced to respond. On March 14, he posted on the governance forum outlining several points:
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Horizon aims to fill Aave’s current gap in RWA services and could surpass Aave’s existing revenue lines within five years;
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Horizon is better suited for centralized operations and thus incompatible with Aave’s current DAO structure;
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Aave DAO will bear no costs from the Horizon initiative;
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For operational reasons, Horizon requires its own token;
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The key issue is agreeing on specific numbers so that Aave DAO can confidently support the project and unlock additional revenue streams.
Clearly, Stani had not yet abandoned plans to launch a new token, hoping instead to negotiate more favorable distribution terms to gain approval.
Conclusion: Founder Forced to Concede
While responding on the forum, Stani also engaged in heated discussions about the proposal on his personal X account.
He repeatedly emphasized that the Horizon plan would incur no costs to Aave DAO and would only bring new income opportunities. However, the community remained concerned about potential dilution of AAVE’s value.
User Champaqui expressed disappointment, comparing Stani to the Ethereum Foundation:
"I’m starting to sense the same vibe from Stani as I do from the Ethereum Foundation (EF)—he’s completely disconnected from what the community is saying, out of touch with reality. It’s very disappointing. He keeps thinking he’s right."
The debate continued until Stani ultimately conceded.
On March 16, Stani made a final statement on X:
"The overall consensus within Aave DAO is disinterest in other tokens. That consensus will be respected. Aave DAO is a real DAO. Once we find the right approach, RWA exploration will continue. Aave has only AAVE."
Aftermath: Unresolved Tensions and Lingering Doubts
This episode—dubbed by some community members as “the most dangerous proposal in Aave history”—has now entered a temporary lull, but many questions remain unanswered. The biggest mystery is why Stani, as Aave’s founder, would risk such severe community backlash by attempting to launch a new token. Unfortunately, aside from Stani himself, no one truly knows the answer.
As X user solarcurve put it:
"The most serious issue now is that the community knows Aave Labs is actively developing new products and companies, yet the majority of the value created won’t flow back to AAVE holders."
Although Stani responded directly, his words did little to calm the sentiment.
"We are fully aligned with Aave, as we are one of the largest stakeholders, with decades of work and innovation ahead."
Doubts are easy to raise and hard to dispel. To regain community trust, Aave Labs still has much work to do.
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