Aave, the largest decentralized lending protocol by total value locked, approved the first governance vote for its V4 upgrade on March 23 with over 645,000 votes in favor and near-zero opposition. The unanimous result arrived after months of internal conflict that saw two of the protocol’s most important contributors announce their departures.
A decentralized autonomous organization, or DAO, is a blockchain-based governance structure where token holders vote on protocol decisions rather than relying on a central authority.
- Aave V4 cleared its first governance vote with 645,000+ votes and near-unanimous support on March 23, 2026.
- BGD Labs, a four-year core contributor, will exit the DAO by April 1 over governance centralization concerns.
- The Aave Chan Initiative, led by Marc Zeller, announced a phased wind-down by July 2026.
- Aave holds $26.46 billion in TVL and has processed over $1 trillion in cumulative loans.
Published: March 29, 2026 12:00 UTC
Two major contributors walk away
The governance approval comes against the backdrop of significant organizational upheaval. BGD Labs, which spent nearly four years as a core technical contributor to Aave, announced in February 2026 that it would cease all contributions by April 1. BGD founder Ernesto Boado cited what he called an “asymmetric organisational scenario” and an adversarial stance toward his team’s V3 work.
At the center of the dispute was control over Aave’s brand assets. BGD Labs had pushed for token holders to receive control of the protocol’s domains, social media handles, and naming rights. Boado argued that Aave Labs held outsized influence through its control of branding channels and its ability to sway governance votes. A December 2025 vote on the matter became contentious after Aave Labs escalated the proposal during the holiday season, which BGD called “one of the worst windows for a high-stakes governance vote.”
Weeks later, the Aave Chan Initiative followed. ACI founder Marc Zeller posted a governance forum notice on March 3 confirming his organization would not renew its contract and would begin a four-month wind-down, with a full exit planned by July. When asked by The Block what triggered the decision, Zeller pointed directly to BGD’s departure: “The main spark is BGD leaving.”
What V4 changes and why it matters
Aave V4 replaces the current monolithic lending pool design with a hub-and-spoke architecture. Shared liquidity sits in central Hubs, while individual borrowing markets operate as Spokes with their own risk parameters, collateral limits, and isolation settings. The design is meant to solve a tension that has plagued DeFi lending protocols: balancing deep liquidity pools with granular risk management for increasingly diverse collateral types.
The upgrade also signals what Blockworks described as the end of Aave’s “multichain sprawl.” Rather than deploying identical copies across every EVM-compatible chain, V4 consolidates liquidity management while still supporting cross-chain activity.
Aave Labs CEO Stani Kulechov had earlier proposed pausing all V3 improvements to accelerate migration toward V4. BGD Labs called the proposal “borderline outrageous” given that V3 still manages the vast majority of Aave’s $26.46 billion in TVL. Kulechov later withdrew the proposal after community backlash.
The governance paradox
The 100% vote in favor of V4 obscures a deeper tension. Two of the protocol’s most prominent independent voices are walking away from governance entirely, raising questions about whether Aave’s DAO model concentrates too much influence in the hands of Aave Labs.
BGD Labs proposed a $200,000 security retainer covering incident response for V3 systems from April 1 through June 1, pending governance approval. ACI committed to a “graceful transition” of its governance infrastructure and incentive programs before its July exit.
The AAVE token traded at roughly $98 on March 27, down about 7% over 24 hours, reflecting broader market weakness rather than governance-specific selling. A binding on-chain vote must still pass before V4 deployment begins. Kulechov said the launch will follow “a safe, controlled, security-first” approach with conservative initial parameters.
For a protocol that has processed over $1 trillion in cumulative loans, the technical upgrade is straightforward. The governance question is harder: whether a DAO can retain independent checks on its most powerful contributor while that contributor builds the next version of the protocol.
FAQ
What is Aave V4 and how is it different from V3?
Aave V4 replaces the current monolithic lending pool with a hub-and-spoke architecture. Hubs hold shared liquidity while Spokes define individual borrowing markets with separate risk settings. This allows the protocol to support diverse collateral types with better risk isolation than V3’s unified pool design.
Why are BGD Labs and ACI leaving Aave?
BGD Labs cited governance centralization concerns and disputes over control of Aave’s brand assets. The Aave Chan Initiative said BGD’s departure was the primary trigger for its own exit, with broader frustrations over funding, voting standards, and the balance of power between Aave Labs and independent contributors.
When will Aave V4 launch on Ethereum mainnet?
The March 23 vote was a non-binding first step. A binding on-chain Aave Improvement Proposal must still pass before deployment begins. Aave Labs CEO Stani Kulechov said the rollout will follow a “security-first” approach with conservative parameters, though no specific launch date has been confirmed.
