March 4 News: The governance structure of the decentralized lending protocol Aave has recently undergone significant changes. Aave Chan Initiative (ACI), a service provider long involved in ecosystem governance, announced that it will gradually end its cooperation with Aave DAO over the next four months. Following the announcement, the AAVE price experienced notable volatility, dropping nearly 10% since the statement was released, and market concerns about the future governance stability of this DeFi project have increased.
Aave Chan Initiative has been one of the most important governance service providers for Aave DAO, responsible for proposal promotion, governance coordination, and community infrastructure development. ACI founder Marc Zeller stated that the team will transition into an independent service provider to be able to submit governance proposals and participate in ecosystem development independently. During the transition period, ACI will still assist the DAO in completing the handover of systems and governance processes to avoid disruption to protocol operations.
The trigger for this governance dispute dates back to December 2025. At that time, Aave Labs transferred approximately $5.5 million in swap fees into a wallet controlled by the company, rather than the Aave DAO treasury. This move sparked widespread controversy within the community. Subsequently, BGD Labs, a core technical contributor to the Aave ecosystem, announced it would cease project development after the contract ends on April 1, citing organizational asymmetry and governance centralization issues.
For decentralized finance projects, governance uncertainty often directly impacts investor confidence. Previously, privacy coin project Zcash also experienced significant price fluctuations due to governance disputes and team restructuring, which took a long time to stabilize.
In addition to governance disputes, the fundamentals of the Aave network have recently come under some pressure. According to DeFiLlama, the protocol’s total value locked (TVL) has decreased from about $36 billion in mid-January 2026 to approximately $26.7 billion in March. Meanwhile, the protocol’s weekly revenue plummeted from $4.31 million in early February to about $1.62 million, a decline of 62%. The simultaneous decline in on-chain activity and revenue indicates weakening market participation.
From a technical perspective, AAVE has been trading within a descending parallel channel since August 2025. This pattern is generally viewed as a bearish continuation structure. If the price cannot break above the approximately $120 resistance trendline, the downtrend may persist. Technical indicators also lean bearish, with the Aroon Down indicator rising to 71% and Aroon Up remaining at 0%, showing dominance by sellers; the MACD remains below the zero line, indicating that downside momentum has not yet significantly eased.
Analysts suggest that if the current support level fails, AAVE could fall back to the key support zone around $70, established in April 2024. However, if the price reclaims and breaks above $120, surpassing the descending channel structure, it could signal a reversal of the current long-term downtrend.
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