Trading volume jumped and AAVE slid about 11% after a contentious governance vote in early January 2026, with the sell-off intensified by a large-holder sale of roughly 230,000 AAVE, or about $37.6 million. The episode exposed a rift between Aave Labs and the Aave DAO and pushed the founder toward a concrete economic reset.
The steps now on the table are meant to restore governance alignment and reduce reliance on crypto lending as the sole engine of growth. Revenue sharing, sizeable buybacks, and a sharper push into real-world assets are being positioned as the core levers to rebuild confidence and broaden the protocol’s revenue base.
What triggered the sell-off
The dispute centered on a proposal to transfer brand asset ownership and redirect swap fees, including integrations like CowSwap, toward entities outside the DAO’s immediate control. The community ultimately rejected the brand transfer, but the debate and a perceived rushed process still sparked heavy trading and an on-chain drawdown. What stood out was how quickly governance friction translated into market pressure.
During the episode, a single large sale of approximately 230,000 AAVE, around $37.6 million, became the focal point of the move as the token dropped more than 10% overall. The reaction underlined two pressure points at once: concentrated token holdings can amplify volatility, and misalignment between off-protocol initiatives and token-holder incentives can erode support fast.
The proposed reset: revenue sharing, buybacks, and RWAs
Founder Stani Kulechov responded with proposals designed to realign incentives while widening Aave’s addressable market beyond pure crypto lending. He framed the longer-term ambition as making Aave the “backbone of all credit” and a “DeFi supermarket,” using that language to justify expansion into new lines of business. The strategy is explicitly about turning a governance shock into an operating and economic redesign.
A central element is converting non-protocol revenue streams into tangible value for AAVE holders, including proceeds tied to Aave App swaps, RWA operations, and institutional lending. The aim is to give the token direct economic utility rather than leaving it primarily as a governance instrument. In parallel, “Aavenomics” proposals like buybacks and token distributions are being used as a stabilizing narrative for token economics, with the DAO reportedly discussing a $50 million annual AAVE buyback program.
On the product roadmap, the focus includes Aave V4 as a unification effort described as building a DeFi operating system and the groundwork for an eventual Aave Network, alongside continued development of Aave Arc for KYC-compliant institutional clients. RWAs are positioned as a core growth vector to diversify revenue and reduce dependence on volatile crypto yield. The operating thesis is that broader utility and steadier fees can make the platform less reflexive to market cycles.
From here, investors and treasuries are likely to track three linked tests: whether the DAO approves revenue-sharing or buyback mechanics, whether RWA expansion generates stable fee income, and whether V4 and Arc deliver the integration required to aggregate liquidity. Until those pieces land, concentrated holdings and governance friction remain real liquidity and reputational risks for market participants.