Aave Price Under Pressure as Analyst Warns of Internal Issues

A recent analysis by analyst Tanaka highlights concerns about the internal structure and governance of Aave (AAVE), a major decentralized finance (DeFi) protocol.

The analysis notes that AAVE price has been steadily declining, dropping 75% from its December 2024 highs. This prolonged weakness meets a new concern, as questions about internal issues have started to surface.

Tanaka emphasizes the importance of a balanced structure in DeFi protocols, where value flows smoothly between contributors and stakeholders. However, Aave's core structure has been criticized for being concentrated, leading to friction and disagreements between key contributors and Aave Labs.

The analysis points out that recent team departures have raised questions about the stability of the ecosystem. bgdlabs exited after strategic disagreements, ACI shut down operations due to conflicts with Aave Labs, and Chaos Labs left due to disputes around funding, control, and transparency.

Tanaka connects these exits to a broader issue: disputes around governance and decision-making have created an environment where key contributors no longer align with the project's direction. The analyst warns that market participants tend to reassess risk quickly when structural changes occur within major protocols.