- Marc Zeller and Aave Chan Initiative released an audit questioning Aave Labs’ $51M “Aave Will Win” request, past funding of about $86M, and the lack of detailed accountability and wallet transparency.
- The report scrutinizes Horizon’s real-world-asset market, claiming concentrated collateral, limited active lending, and DAO spending of millions in incentives versus roughly $216,000 in revenue.
Tensions around Aave governance have intensified as major stakeholders clash over accountability, funding, and control of the lending protocol’s future. Ahead of a vote on what one delegate group calls the largest funding request in Aave’s history, a public dispute has emerged between Aave Labs and the Aave Chan Initiative (ACI), led by Marc Zeller, over how past work and financial flows should be evaluated.
Aave governance debate over Aave Labs’ record
Aave Labs released a lengthy contributions report outlining its role in building the protocol from its 2017 EthLend ICO roots to the current multi-chain system. The document highlighted features such as the pooled-liquidity design, Flash Loans, the Safety Module, and the Efficiency Mode introduced in V3, framing them as core components created and shipped by Aave Labs before the decentralized autonomous organization’s present service-provider structure took shape. The report was published as a reference for tokenholders preparing to assess the “Aave Will Win” proposal, a new initiative presented as a long-term roadmap.
Marc Zeller and ACI challenged the framing almost immediately. In responses on the governance forum, Zeller argued that Aave Labs’ report resembled a marketing-style narrative rather than a detailed accounting of outcomes, costs, and value returned to the decentralized organization. From ACI’s perspective, tokenholders now face a $51 million Snapshot proposal and should have access to a clear breakdown of what Aave Labs has delivered, how much funding it has received, and what the protocol gained in return. ACI said it had first produced its own transparency report and then applied the same methodology to Aave Labs’ history, centering on three questions: delivery, cost, and return.
ACI’s audit contended that, despite years of work and substantial funding, Aave Labs has not produced a formal accountability report covering cost-per-outcome analysis, financial statements, or wallet-level transparency. That absence is at the core of the governance dispute, as the upcoming “Aave Will Win” vote would, if approved, allocate a record sum to a team whose historic capital flows and current token holdings remain only partially documented in public channels.
Financial scrutiny and Horizon case study in Aave governance
The most pointed part of Zeller’s review focused on money flows linked to Aave Labs. ACI estimated the group’s “total capitalization” at about $86 million. The figure was broken down as $16.2 million from the 2017 ICO, $32.5 million raised in venture capital rounds, $31.93 million paid directly by the DAO, and around $5.5 million in what Zeller described as “unapproved” swap fees. The post also flagged that the founding team kept 23% of the original LEND supply before the token migrated to AAVE, while stressing that current AAVE holdings associated with the team have not been publicly disclosed.
To illustrate its concerns, ACI used Horizon, Aave’s real-world-asset (RWA) market, as a case study. The audit argued that, despite headline-grabbing total supply numbers, the underlying market appears far narrower when farmed liquidity and idle positions are excluded. According to Zeller’s onchain analysis, Horizon’s total supply stands near $466 million, with about 69% held in stablecoins and 31% in RWA collateral. That RWA side, he said, is largely concentrated in a single asset, USCC. Zeller further claimed that three large user positions represent 59% of the pool, including a major RLUSD depositor with no borrow activity and a DirectMinter position connected to idle GHO.
After stripping out those components, ACI argued the practical RWA lending base looks closer to $135 million in single-issuer collateral backing a smaller volume of stablecoin borrowing by a limited number of addresses. From that perspective, Horizon is described as functional but far less diversified than top-line total value locked figures suggest. The audit then turned to Horizon’s economics, stating that DAO revenue sitting in the market’s collector is roughly $216,000, while DAO spending has been much higher. Zeller cited around $4.2 million in Merkl incentives since launch, plus additional costs from GHO’s savings rate, and summarized the dynamic as approximately $24 in spending for every $1 in income.
ACI also revisited Horizon’s initial governance path. The post said early proposals, including a plan for a new token with 15% going to the DAO, faced strong pushback. It further argued that the final version passed in part due to a single powerful delegation that, according to ACI’s figures, represented 57% of the “FOR” votes. For Zeller, that voting pattern illustrated how concentrated voting blocs can shape outcomes on contentious issues while broader Aave governance debates about conflicts of interest remain unresolved.
Broader challenges to Aave Labs and fee flows
Beyond Horizon, ACI used its audit to revisit a wider critique: that Aave Labs created the initial protocol versions but has contributed less to the system’s recent operational growth than other service providers funded by the DAO. The post credited Aave Labs with developing V1, V2, and the first V3.0 codebase. However, it claimed that subsequent upgrades and day-to-day performance improvements, which underpin much of the current revenue engine, have come from external contributors contracted by the DAO.
This line of argument arrives while the community is already divided over fee structures and control. One flashpoint involves swap fees on the aave.com interface. Zeller’s post alleged that partner-fee revenue from ParaSwap referrals previously went to the DAO, but that this arrangement changed in mid-2025 when Aave Labs altered integrations. According to ACI, the shift directed 15 to 25 basis points of fees to an address it described as controlled by Aave Labs, and it said this occurred without a formal governance decision. The audit estimated that this redirection involved 933 ETH on mainnet, plus undisclosed amounts on Layer 2 networks, totaling around $5.5 million as reflected on a TokenLogic dashboard.
ACI then linked these fee disputes directly to the “Aave Will Win” plan. In the proposal, Aave Labs has pledged to send “100% of Aave Labs’ product revenue” to the DAO going forward. Zeller argued that, if the earlier fee redirection allegations hold, such a promise functions less as new generosity and more as a reversal of contested changes that had moved revenue away from the DAO in the first place. In this framing, Aave governance is not only deciding on a funding package, but also weighing whether to ratify or unwind prior arrangements that were never explicitly approved onchain.
The governance strain has been compounded by BGD Labs’ decision to step back. BGD Labs, a core engineering group credited with Aave’s V3 upgrades and major contributions to the current revenue infrastructure, recently announced it will withdraw when its existing agreement expires on April 1. In explaining the move, the team referenced mounting frictions around decision-making, suggesting that the governance climate has made continued long-term development difficult.
Power concentration and voting in Aave governance
ACI’s report also turned to the mechanics of voting and influence. Zeller referred to a previous proposal aimed at clarifying conflicts of interest and improving disclosure standards, which ultimately failed. According to his onchain review, most of the “NAY” votes in that episode were tied to an address cluster linked with founding infrastructure. He used that finding to argue that a small group of actors can still determine outcomes across several major votes, including the Horizon decision.
The audit raised similar concerns about the structure of the “Aave Will Win” package, which includes an allocation of 75,000 AAVE tokens. ACI emphasized that this sum carries not just monetary value but also governance weight in Aave governance. Since Aave Labs’ full AAVE holdings are not publicly documented, Zeller argued that transferring additional tokens could deepen an already opaque concentration of voting power within Aave governance. The post framed this point as a key question for tokenholders: whether it is prudent to expand the voting influence of an entity that, in ACI’s view, has not provided complete insight into its broader stake.
Against this backdrop, the core issue presented to the DAO is whether to fund a new expansion plan while leaving requested accountability measures unresolved. The “Aave Will Win” proposal includes new product work and a faster push toward an Aave V4 iteration. ACI’s position is that, before committing $51 million, tokenholders should insist on wallet transparency, detailed financial disclosures, and clear return-on-investment reporting, especially in light of the $86 million capitalization estimate and the fee-routing questions around the aave.com interface.
Conclusion
The latest dispute over Aave governance has turned a funding proposal into a wider examination of power, transparency, and performance. Aave Labs has presented a decade-long record of technical contributions and is asking tokenholders to back a substantial new plan under the “Aave Will Win” banner. ACI, led by Marc Zeller, has responded with an audit that challenges the framing of that record, dissects Horizon’s economics, and questions fee flows and voting patterns. As the $51 million Snapshot approaches, Aave’s DAO must decide whether to approve a major new mandate for Aave Labs while debates over accountability, revenue routing, and token concentration remain unresolved.
Disclaimer
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Featured image created by AI
