Aave DAO Saga Deepens as Alignment Proposal Moves to Snapshot; AAVE Price Down 7%

After a new governance alignment proposal was moved to a Snapshot vote, the Aave DAO is once again experiencing tension. The shift provoked resistance from major players in the ecosystem and coincided with a drastic drop in the price of its native token.

What Is The Cause Of The Internal Conflict In Aave DAO?

The controversy started after an alignment proposal was shifted to Snapshot, which Aave Labs CEO, Stani Kulechov, revealed. This vote was preceded by days of intense debate in the governance forums. Some of the contributors say that the shift to the Snapshot vote did not occur with the entire support of the consensus.

Kulechov justified the process and argued that the discussion on the proposal was several days long already. He also stated that Snapshot voting is guided by set governance principles and that a vote was the best way to go.

However, the shift to Snapshot voting was criticized by Marc Zeller, a key contributor to the ecosystem. Zeller argued that the proposal proceeded without resolution to important questions and that there was no consensus between delegates.

The tensions in this community are happening after the SEC concluded its lengthy investigation into Aave, which has lessened regulatory stress. Zeller cautioned that this might reduce participation in voting and ecosystem discussions over time.

He identified the holiday period as an inappropriate period to vote on such an important matter. He said that this was likely to lower proper exchange of knowledge among large holders.

Will the Aave Snapshot Vote Reduce DAO Trust? 

More criticism was from the writer of the proposal, Ernesto Boado. He claimed that the Snapshot filing was not part of its intent. In addition, he was not consulted prior to the proposal being moved to the voting phase.

Boado also noted that rushing the vote will make it unable to build trust. He added that an open discussion is the key to an efficient DAO governance. The proposal author further said if he had been consulted, he would not have agreed to the timing.

The conflict has unveiled more serious issues in the governance dynamics in Aave. The issues surface as Aave grows its real-world asset footprint, emphasizing the need for governance alignment.

According to Aylo, a prominent community member, the latest frontend modifications have caused swap-related revenue to be stolen from the DAO. According to him, such allegations are fueling the rhetoric that there is a hostile nature to the governance process.

Hence, he warned that this event may overturn how tokenholders consider the relationship between DAOs and the core development organizations. The tensions have also had a short-term negative effect on the token’s price.

AAVE Price Drops as Governance Uncertainty Unfolds

TradingView data showed that AAVE price dropped nearly 7% in the last day and 16% during the past week amid uncertainty over governance issues. The AAVE intraday charts depict the trend with low highs and constant selling power.

Traditionally, AAVE price has often bounced back once governance transparency has been restored. However, it is still hard to strike a balance between the efficient decision-making process and community consensus. Hence, the resolution to this matter will determine whether the community can keep trusting the current Aave governance model.