Key Insights:
- AAVE price traded at $115.84, with immediate support at $114.5-$115.0, while traders opened short positions anticipating near-term governance-driven volatility.
- Marc Zeller published a comprehensive accountability audit of Aave Labs on February 25, questioning ROI on $86 million in prior funding and challenging the “Aave Will Win” framework proposal.
- Despite short-term bearish sentiment, AAVE crypto trades at significantly lower valuations than traditional finance lenders, while offering competitive advantages in its lending model.
Marc Zeller, founder of the Aave Chan Initiative (ACI), released a governance forum post on February 25, scrutinizing Aave Labs’ track record, potentially creating a clash that could impact AAVE’s price.
Zeller also questioned the proposed “Aave Will Win” funding framework. The post examined Aave Labs’ historical capitalization, product execution, and return-on-investment metrics.
The post framed Aave Labs’ funding request as an “accountability audit” using three core questions: what did they deliver, what did it cost, and what was the return.
Zeller argued that Aave Labs had already raised substantial capital through multiple channels: $16.2 million from the initial coin offering, $32.5 million from venture capital rounds, $31.93 million in DAO payments, and approximately $5.5 million in allegedly unapproved fee capture.
The post also highlighted that Labs retained 23% of the original LEND token supply, which later migrated to AAVE.
The governance critique arrived as the AAVE price tested critical support levels.
With the token trading at $115.84, technical analysis identified support zones that would become critical if selling pressure intensified.
The immediate “must-hold” level sat at $115.0-$114.5, aligning with recent daily closes around $114.49-$114.64 from February 23-24.
Trader VIKTOR posted on X that he opened a short position based on the governance post, reasoning that “FUD should be detrimental to token performance in the short-term.”
However, VIKTOR added a crucial caveat:
“I’ll close the position if there are signs of strength. AAVE is not a coin that I particularly like to short because it’s one of the few coins that is clearly not worth zero.”
Technical traders mapped support zones for the AAVE price over the next 72 hours.
Below the $115.0-$114.5 immediate support, the next demand shelf appeared at $112.7-$112.1, supported by recent closes at $112.71 and $112.63 from February 8-9. February 25 intraday low of $111.92 represented a line in the sand.
If $112 broke, traders identified $109.7-$109.3 as the next bounce zone. The deepest support in the 72-hour risk map sat at $107.6-$107.4, aligning with the $107.38 close from February 11.
Horizon Case Study Becomes Central To ROI Debate
Zeller’s post used Aave Horizon as the primary case study for questioning return on investment.
The analysis broke down Horizon’s total value locked composition, arguing that headline TVL figures masked concentration in stablecoin deposits rather than diversified real-world asset collateral.
The post claimed that cumulative DAO revenue from Horizon reached approximately $216,000 against total costs of roughly $5.25 million since launch, producing a headline ratio of “$24 spent per $1 earned.”
The governance post also addressed the attribution question of “who built the revenue engine” at Aave crypto.
Zeller argued that while Aave Labs deserved credit for building V1, V2, and V3.0, most of the protocol’s recent revenue growth came from upgrades delivered by DAO service providers, including BGD Labs, Chaos Labs, LlamaRisk, TokenLogic, and ACI.
The post claimed V3.0-era revenue totaled $3.33 million compared to $179 million generated after subsequent upgrades implemented by service providers.
BGD Labs’ announced departure became another focal point.
The post characterized BGD as the team most responsible for V3’s recent upgrade path, creating questions about who would maintain V3 and independently review V4 architecture after their exit.
Aaave Price Long-Term Value Proposition Remains Intact Despite Governance Friction
While short-term traders positioned for governance-driven volatility, fundamental analysts highlighted a disconnect between AAVE’s current valuation and its protocol metrics.
Researcher Emperor Osmo compared Aave to traditional finance lenders, noting that the token implied a price-to-sales ratio of 2.2x versus 8.9x for Klarna and 19x for Figure.
The price-to-book ratio showed similar compression, with AAVE trading at 2.8x, compared with Klarna’s 4.1x, Affirm’s 6.8x, and Figure’s 7.6x.
The lending book comparison strengthened the fundamental case. Aave’s $17 billion in loans outstanding exceeded those of Klarna ($10 billion), Affirm ($8.8 billion), and Lending Club ($6.5 billion).
Net interest margins also favored Aave, operating at approximately 0.6% compared to Lending Club’s 6%, Affirm’s 4%, and Klarna’s 0.8%. Emperor Osmo characterized the lower margin as a competitive advantage rather than a weakness.
At the same time, the governance post acknowledged that the “Aave Will Win” framework proposed sending 100% of product revenue to the DAO treasury in exchange for operational funding.
However, Zeller framed the proposal as a bundle of multiple decisions, such as revenue alignment, V4 ratification, foundation structure creation, and substantial funding, into a single governance package that reduced nuanced choice for delegates.
The February 25 post also questioned Aave Labs’ frontend execution and business development track record, citing examples of large deals that allegedly went to competitors or underperformed compared with DAO-service-provider-run launches.
Zeller argued that the V3 versus V4 strategy created technical uncertainty, with Labs leadership allegedly discouraging V3 feature development while positioning V4 as the only viable path forward.
For traders, the technical map remained clear: above $114.5, the structure stayed constructive. Below that level, traders should watch $112.1-$112.7 first, and a break below $111.9 would shift momentum toward $109.7 and potentially $107.5.
For longer-term holders, the fundamental case rested on Aave’s dominant position in decentralized lending, favorable unit economics versus traditional finance, and the protocol’s ability to navigate governance structure questions while maintaining protocol development momentum.