Aave founder and CEO Stani Kulechov has issued a public critique of current decentralized autonomous organization (DAO) governance models, arguing they need to evolve to remain competitive. In a detailed post on X on Tuesday, Kulechov stated that DAOs, as currently run, are "extraordinarily difficult" not due to technical complexity, but because of internal organizational friction and politicization.
Kulechov highlighted the "slow DAO" process, where decisions can be bogged down by "weeks of forum posts, temperature checks, and multiple votes." He warned this sluggishness occurs while potential competitors iterate faster. Furthermore, he argued DAOs quickly become politicized, with participants forming alliances and leaning toward the loudest voices, ultimately creating a system of "politicians" rather than builders. "When politicians win, it's game over for builders," he wrote.
These remarks follow significant governance upheaval within the Aave community. The controversy centers on the "Aave Will Win" proposal, introduced by Kulechov in January, which passed a temperature check on March 1. The framework aimed to redirect community resources to develop Aave v4 and change the funding model for Aave Labs, effectively turning it into a quasi-DAO subsidiary.
The proposal sparked a major conflict, leading to the departure of two key entities: BGD Labs, a core technical contributor, and the Aave Chan Initiative (ACI), a leading service provider for the Aave DAO. ACI founder Marc Zeller raised concerns that the proposal concentrated governance power with Aave Labs, allowing it to approve its own funding requests despite granting the DAO ownership of brand assets. Ironically, the "Aave Will Win" proposal itself was a response to prior disputes where Aave Labs had unilaterally redirected frontend revenue to a corporate wallet.
In his post, Kulechov proposed a new path forward. "DAOs are not dead, they should evolve," he asserted. He believes governance should focus only on major protocol changes and treasury strategy, while "everything else is execution, and execution requires leaders in an organization." He emphasized that rules should stay in the code, treasuries should remain transparent, and token holders should retain safeguards on major decisions, but day-to-day operations require dedicated teams.
Kulechov also revealed operational changes at Aave Labs, including spinning off the Avara umbrella brand (which housed Lens Protocol and Family wallet) and simplifying its product offerings to Aave App, Aave Pro, and Aave Kit. His ultimate vision is for Aave to "rearchitect all the world's lending infrastructure" and pioneer a revenue model spanning both protocol and product layers. "We now have a good foundation and multi-decade vision for Aave that is fully $AAVE token centric," he concluded.
