Aave drops 11% as ACI announces exit from protocol amid governance dispute

AAVE dropped nearly 11% on Tuesday as the Aave Chan Initiative (ACI) announced it will wind down operations in the protocol's DAO following governance disputes.

ACI to wind down operations amid power struggles within Aave DAO

ACI, one of Aave DAO’s governance delegates and service providers, will not renew its engagement with the protocol and will fully wind down operations over the next four months.

In a statement on Tuesday, ACI noted that the wind-down will include completing outstanding Skyward commitments, open-sourcing internal infrastructure and transferring delegate coordination and committee responsibilities. These include roles within the Aave Liquidity Committee, GHO Stewards and the Guardian multisig.

“There is no role for an independent service provider in an environment where the largest budget recipient holds undisclosed voting power and uses it on its own proposals,” Zeller wrote.

To facilitate the transition, ACI plans to submit a direct-to-AIP proposal to cancel its GHO funding stream (stream 100070), transferring 120 days’ worth of funds to treasury.aci.eth and returning the remainder to the DAO. The organization will also terminate its AAVE vesting stream.

According to Zeller, over three years, ACI drove 61% of all governance actions, contributed to revenue strategies that accounted for 48% of protocol income, and deployed $101 million in incentives. During that period, Aave’s DeFi market share reportedly increased from below 50% to more than 65%.

The departure follows a prolonged governance dispute that intensified in late 2025 and became public in February, after BGD Labs announced its exit as a protocol developer. 

BGD cited what it described as an “asymmetric organizational scenario” stemming from Aave Labs’ increased centralization efforts. According to BGD, Aave Labs controls the brand, communication channels, and significant voting power while advancing a V4 roadmap perceived as adversarial to the dominant V3 system.

The exits of both BGD Labs and ACI mark the most significant governance fragmentation in Aave’s history. The developments raise broader questions about decentralization, the pace of innovation, and the evolving balance of power between Aave Labs and independent contributors within the protocol’s $27 billion total value locked ecosystem.

AAVE drops 11%, eyes $97 support

Following the announcement, AAVE is trading around $109, down nearly 11% over the past 24 hours on Tuesday.

The near-term bias is mildly bearish as price holds below the 20-day Exponential Moving Average (EMA) near $118 and remains capped by the long-standing descending resistance line, last rejected around $125.

The Relative Strength Index (RSI) has slipped back toward the low-40s after failing to sustain a move above 50, while the Stochastic Oscillator (Stoch) retreated sharply from overbought territory, both pointing to fading bullish momentum after the recent rebound stalled beneath nearby resistance.

Immediate resistance is located at $122, with a stronger barrier at $132, where horizontal resistance converges with the broken EMA zone and the broader descending trend line. On the downside, initial support emerges at $97, ahead of a more distant floor near $77, levels that define the lower boundary of the broader consolidation.

A daily close below $97 would reopen room toward the $77 support, while a sustained break above $122 would be needed to challenge $132 and start easing the prevailing downside pressure.

(The technical analysis of this story was written with the help of an AI tool.)