Aave dips amid BGD Labs announcing it will cease contributions
“Their departure is the most significant talent loss in Aave’s history.”
Aave, the largest on-chain lending protocol, is losing one of its longest-tenure service providers, Bored Ghosts Developing (BGD) Labs.
After four years of nearly exclusive contribution to the lending protocol, with $25.8 billion in total value locked, BGD Labs announced Friday it will not renew its engagement with Aave’s decentralized autonomous organization (DAO) in April, citing centralization concerns with Aave Labs, headed by the protocol’s founder, Stani Kulechov.
Governed by its DAO, the protocol is steered by token holders and various service providers such as Aave Labs, BGD Labs, Aave Chain Initiative, and Chaos Labs, as well as other organizations and individuals.
The departure of BGD Labs is concerning for every token holder, according to Marc Zeller, founder of service provider Aave Chan Initiative. “The DAO’s biggest engineering contributor felt they couldn’t keep building. Their departure is the most significant talent loss in Aave’s history,” Zeller told Sherwood News.
Omer Goldberg, founder of risk management firm Chaos Labs, also said Aave’s dominant position in the market is directly tied to BGD Labs’ work. “This is a new chapter for Aave, but it’s hard to ignore that core contributors felt there was no path forward under the new guard,” Goldberg said to Sherwood.
“Badly executed” pivot
BGD Labs’ departure stems from Aave’s pivot from an independent company building several products to a more central contributor within the ecosystem with the upcoming rollout of v4.
BGD Labs said, “While this pivot is totally legitimate and potentially positive to overall Aave, we believe the way of addressing it has been badly executed: Aave Labs believes that the whole Aave DAO and contributors should pivot in the direction they believe in, without sufficient consideration of existing contributors’ expertise.”
BGD Labs highlighted difficulty in overcoming centralization issues with Aave Labs, which has control of branding channels and substantial power to influence governance votes. “We stop contributing because the environment no longer aligns with how we operate and where we see our value,” BGD Labs wrote.
Departing after previous proposal on branding ownership
The announcement comes about two months after a controversial governance vote that ended on Christmas. The proposal, authored by BGD Labs founder Ernesto Boado, centered on token holders receiving control of the protocol’s brand assets, such as domains, social handles, and naming rights.
The December vote was contentious after Aave Labs escalated the proposal despite the holiday season being “one of the worst windows for a high-stakes governance vote” and Boado and other members expressing frustration over a lack of open discussion.
The proposal to change brand ownership did not pass, with 41.2% of votes abstaining, though Aave Labs’ Kulechov voted nay, arguing that the “proposal takes us in a direction that is not good for the Aave ecosystem. It forces a complex legal and operational issue into a simple yes/no, empty payload vote with no clear path forward.”
The ordeal saw the token’s price drop from nearly 20% from the initial proposal to the end of the vote, shedding more than $702 million in the cryptocurrency’s market capitalization.
