The most used DeFi protocol in the world is going through an unprecedented zone of turbulence. The deployment of Aave V4 on Ethereum, presented as a major step forward for the crypto ecosystem, has on the contrary opened deep fractures within its own organization. Between shattering departures, catastrophic transaction and governance war, Aave is currently playing one of the most delicate parts of its history.
In brief
- Aave Labs submitted a governance proposal on March 13, 2026 to deploy Aave V4 on Ethereum.
- One user lost almost all of $50 million in a poorly executed swap through the Aave interface, recovering only $36,000.
- BGD Labs, a key technical contributor for four years, announced its departure from the DAO on April 1, 2026.
- Marc Zeller, founder of ACI, refuses to support V4 and is openly critical of Aave's current leadership.
A proposal that crystallizes tensions
On March 13, 2026, Aave Labs published a proposal on its governance forum to deploy Aave V4 on the Ethereum mainnet.
The architecture presented is based on a system of shared liquidity hubs, common reserves on which several lending markets can rely via limited credit lines. A modular approach, designed to reinforce the security and adaptability of the protocol.
On paper, the ambition is legitimate. Aave Labs says V4 is the result of 345 days of cumulative audits, formal verifications and a $1.5 million public security program. However, behind the scenes of the DAO, the atmosphere is much less serene.
BGD Labs, Aave's main technical contributor for four years, announced in February that it would not renew its contract beyond April 1, 2026.
The reason given is clear: increasing centralization around Aave Labs and a presentation deemed misleading of the performances of Aave V3, used to justify the move to V4. This departure deprives the protocol of irreplaceable technical expertise, accumulated over hundreds of critical decisions.
The 50 million crypto swap that ignited the powder
If governance tension was already brewing, an incident that occurred on March 12 ignited the powder. A user attempted to convert $50 million into aEthUSDT via the CoW protocol and Aave's interface.
Result: the order was directed to almost empty liquidity pools, causing a sudden collapse in the execution price. In the end, the user only got back $36,000, a loss of more than 99%.
Stani Kulechov, founder of Aave, clarified that the interface had indeed displayed warnings of high slippage, with mandatory validation by the user. Aave has also announced the reimbursement of $600,000 in fees collected on the transaction. However, this did not calm Marc Zeller, founder of the Aave Chain Initiative (ACI).
In a scathing message posted on X, he recalls that the old interface imposed a strict ceiling of 30% slippage. From now on, he writes with biting irony:
“ Users can take full advantage of the power of DeFi with 99% slippage. »
The next day, he went further, believing that the philosophy of user protection which had forged Aave's identity now seems to be over. “ Aave now has new cooks in the kitchen », he concludes.
Despite the crisis, the fundamentals remain solid: 155,000 monthly active users in February, a doubling in six months, and 86% of revenues generated on Ethereum, the very place where V4 is to be deployed.
In short, Aave is not in agony. However, if the protocol fails to reconcile its historical contributors with its new vision, it is its governance itself, its main decentralizing asset in the crypto ecosystem, which risks lasting erosion.
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