The dispute between Aave Labs and the Aave DAO appears to be escalating, with DAO delegates ramping up their hostility after Labs\u2019 \u201cAave Will Win\u201d proposal<\/a> requested another $51 million in development funding from the DAO.<\/p>\n On Feb 20, delegate BGD Labs announced<\/a> its intent to halt its work with the DAO due to Labs\u2019 focus on Aave V4 rather than \u201ca very mature and successful V3.\u201d The decision came after Aave Labs co-founder Stani Kulechov stated in the proposal that \u201cOnce V4 is mature, V3 parameters should be gradually adjusted to encourage migration, following the same approach used in past version transitions.\u201d<\/p>\n Marc Zeller, the founder of Aave-Chan Initiative (ACI), another service provider to the Aave DAO, called BGD\u2019s impending departure from the DAO a major change and sold a portion of his AAVE holdings.<\/p>\n Today, the feud between the DAO and Labs was cranked up a notch after Zeller published a full audit of Labs\u2019 performance<\/a> in the Aave governance forum, bashing Aave Labs\u2019 product delivery, profitability, and business development (BD).<\/p>\n Zeller referred to Labs\u2019 standalone products, including Lens Protocol<\/a>, GHO v1<\/a>, and Horizon<\/a>, as \u201cThe Product Graveyard,\u201d citing \u201czero successes.\u201d He went on to point out that even its more successful launches, such as Horizon, which has commanded over $500 million in total value locked (TVL), still resulted in a negative 96% return on investment (ROI), and that Aave\u2019s stablecoin, GHO v1, depegged<\/a> and had to be rebuilt by BGD and TokenLogic.<\/p>\n The report went on to criticize Aave Labs\u2019 BD department, noting that Labs was set to work with prominent entities in DeFi and traditional finance like Coinbase\u2019s Layer 2 Base, World Liberty Financial, Apollo, and Mantle.<\/p>\n Morpho emerged as the most notable competitor in these relationships and now serves as the backend of Coinbase\u2019s decentralized lending product, and recently announced a partnership<\/a> with $800 billion asset manager Apollo Global Management.<\/p>\n While the relationship between the DAO and Labs continues to crack, Aave remains DeFi\u2019s leading protocol by TVL, accounting for more than 28% of the DeFi market with $27.5 billion across all chains.<\/p>\n Meanwhile, Morpho is the second largest lending protocol and sixth largest in DeFi with $5.8 billion.<\/p>\n
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