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Bored Ghosts Developing, the core engineering firm behind Aave v3, announced Friday it will exit its contract with the Aave DAO in April, publicly accusing Aave Labs of applying strategic pressure to deprecate the protocol’s primary revenue engine before v4 is ready — sending the AAVE token down more than 6%.
BGD stated it could not continue working on Aave v3 while what it described as strategic pressure toward v4 was underway.
The group emphasized that v3 remains the protocol’s primary revenue engine and a fully operational system.
“We believe even proposing this on the main revenue-maker & fully functional engine of Aave is borderline outrageous,” — Bored Ghosts Developing, post on Aave governance forum.
The Aave governance dispute triggered an immediate market reaction. The AAVE token declined more than 6% following the announcement, reflecting investor concerns about continuity and governance stability.
Kulechov publicly acknowledged BGD’s role in building the protocol and responded to the escalating Aave governance dispute on social media.
“Aave V3 would not be what it is today without their contributions,” — Stani Kulechov, Founder, Aave.
BGD co-founder Ernesto Boado previously served as chief technology officer at Aave Labs, underscoring the long-standing ties between the entities now at the center of the Aave governance dispute.
The Aave governance dispute extends beyond technical upgrades. In recent months, delegates within the DAO have debated the control of brand-related assets, including naming rights, social media accounts and the aave.com website.
A proposal to transfer those assets from Aave Labs to the DAO narrowly failed.
Delegate Marc Zeller described BGD’s exit as a significant blow amid the broader Aave governance dispute.
“Devastating,” — Marc Zeller, Aave DAO Delegate.
Aave, which reports more than $26 billion in user deposits, operates under a decentralized governance model in which tokenholders vote on proposals.
However, the Aave governance dispute illustrates the complexity of balancing decentralized decision-making with the influence of founding entities and core contributors.
Aave Labs later proposed redirecting revenue from Aave-branded services to the DAO but tied that arrangement to formal recognition of Aave v4 as the protocol’s future technical foundation.
BGD objected to that linkage, warning that altering parameters on v3 could pressure users to migrate prematurely.
In response to the Aave governance dispute, Aave Labs said there is no immediate migration timeline and that Aave v3 will remain supported.
Kulechov added that Aave Labs could assume maintenance responsibilities if necessary and emphasized that the protocol will continue operating normally.
BGD’s contract is set to expire April 1, though the firm has offered short-term transitional support to help the DAO identify a replacement.
The Aave governance dispute thus marks the first major operational fracture in what has long been viewed as one of DeFi’s most stable governance structures.
Meanwhile, regulatory uncertainty surrounding the protocol has eased. The U.S. Securities and Exchange Commission formally concluded its multi-year investigation into the Aave Protocol without recommending enforcement action.
The decision ends nearly four years of scrutiny for one of decentralized finance’s most prominent platforms.
For crypto investors and policymakers, the Aave governance dispute underscores broader questions about DAO governance, intellectual property control and protocol evolution.
As DeFi projects mature and manage billions in user deposits, disputes over upgrade pathways and brand authority may become more frequent.
The resolution of the Aave governance dispute could shape how decentralized protocols balance innovation with stability and how governance models adapt as projects scale into multi-billion-dollar ecosystems.
