Aave drops 18% over the week amid controversy, underperforming major crypto tokens.

Aave Drops 18% as Governance Dispute Shakes Investor Confidence

Aave’s ongoing governance battle is taking a toll on its token, with AAVE falling roughly 18% over the past week. The decline makes it the worst-performing asset among the top 100 cryptocurrencies, even as Bitcoin, Ether, and other major tokens trade largely sideways.

The selloff appears to be specific to Aave, rather than reflecting a broader market downturn. The decline follows a dispute within the protocol over control of its brand, domains, and public channels, which has unfolded across forums and social media. Traders are reacting to the uncertainty surrounding future governance and decision-making.

Blockchain analytics from Onchain Lens shows major holders acting quickly. On Monday, one investor offloaded about 230,000 AAVE—valued at nearly $35 million—swapping the tokens for Ether derivatives and Bitcoin. This sale triggered an intraday drop of nearly 10%, compounding pressure that had been building since a governance proposal moved to a Snapshot vote.

Meanwhile, Aave founder Stani Kulechov appears to be buying the dip. Data shows he purchased approximately $12.6 million in AAVE over the past week at an average price of $176, leaving him with an unrealized loss of $2.2 million as the token slid further. While founder buying is often seen as a sign of confidence, it has not stemmed the broader selloff.

The divergence between AAVE and the wider crypto market is striking. Bitcoin has held near $90,000, while Ether, XRP, and other large-cap tokens have avoided similar declines. This suggests traders are selectively exiting protocols facing internal uncertainty rather than de-risking the entire crypto market.

Unlike macro-driven selloffs, governance disputes carry open-ended risk. There is no clear timeline for resolution, and outcomes can significantly alter how value flows through a protocol. For Aave, the debate over who controls the brand and front-end interfaces directly affects how the DAO exercises influence off-chain—an issue unlikely to be resolved quickly.