Which integration redirected AAVE swap fees?

Aave (AAVE) updated its app to use a new swap service called CoW Swap. This change redirected swap fees to a wallet controlled by Aave Labs, which caused controversy within the community and led to a governance vote.

1. Fees from swaps made through CoW Swap were sent to an Aave Labs wallet, not the DAO treasury, sparking pushback and a governance vote reported here.
2. This update replaced the previous default swap service, ParaSwap, as discussed in a community post on X here.

Deep Dive

1. CoW Swap Integration

Aave’s app switched its default swap aggregator to CoW Swap. This was presented as a way to offer better pricing for users, but it also changed where the swap fees were collected, leading to the controversy. More details are available in this article.

What this means: Choosing CoW Swap affected who received the swap fees, which is important for how the project’s funds are managed.

2. Fee Routing

Community members raised concerns that swap fees were being sent to a wallet controlled by Aave Labs instead of the DAO treasury. This led to a governance dispute and a failed proposal aimed at bringing brand assets under direct DAO control. The situation is summarized here and further discussed here.

1. The main issue was the diversion of fees away from the DAO after the CoW Swap integration details here.
2. The governance vote to address this was rejected, as covered in the media reports.

What this means: How fees are routed is critical to maintaining trust and alignment within the DAO. Redirecting fees to a Labs wallet reduced the value the DAO received, causing friction.

3. ParaSwap to CoW Swap Context

Community discussions pointed out that the default swap aggregator changed from ParaSwap to CoW Swap, which is directly connected to the fee redirection issue. This is highlighted in a post on X here.

1. The switch in aggregators was the key operational change noted by DAO members see post.
2. There were calls for clearer communication on how such product decisions benefit AAVE token holders, as covered in the reports.

What this means: Even changes to the app’s user interface or backend services can significantly impact the project’s finances. Transparent communication before making such changes can help avoid community backlash.

Conclusion

The integration of CoW Swap redirected Aave’s swap fees to a wallet controlled by Aave Labs, which led to community concerns and a failed governance proposal to regain DAO control. This situation highlights how technical decisions around integrations can affect the project’s financial health and the importance of clear, transparent coordination between Aave Labs and the DAO.

What could affect the price of AAVE?

Aave’s price is currently caught between promising upgrades and governance challenges.

1. V4 Upgrade & Horizon Expansion – Big technical improvements and growth in real-world assets (RWA) could attract more institutional investors.
2. Regulatory Progress – The SEC ended its investigation and new EU rules support compliant stablecoin services, lowering legal risks.
3. Governance Conflicts – Disagreements between the community and the development team create short-term uncertainty.

In-Depth Look

1. Protocol Upgrades & Real-World Asset Growth (Positive Outlook)

What’s happening: Aave’s upcoming V4 upgrade, planned for 2026, introduces a “Hub-and-Spoke” design to connect liquidity across different blockchains. Meanwhile, the Horizon platform, which allows real-world assets like loans and bonds to be used as collateral, has already attracted $550 million in deposits. Partnerships with companies like Circle and Franklin Templeton could push this number past $1 billion.

Why it matters: These changes help solve a common problem in decentralized finance (DeFi) — fragmented liquidity — and tap into a huge $16 trillion market of tokenized assets. If successful, Aave could become the main credit platform across blockchains, increasing total value locked (TVL) and generating more fees, which usually supports price growth.

2. Regulatory Developments (Mixed Impact)

What’s happening: The U.S. Securities and Exchange Commission (SEC) ended its four-year investigation into Aave in August 2025 without taking action (CoinMarketCap). In Europe, new regulations under MiCA (Markets in Crypto-Assets) allow Aave to offer stablecoin services that meet compliance standards.

Why it matters: This regulatory clarity removes a big source of uncertainty. However, new rules like the SEC’s “Innovation Exemption” (Cryptonews) might require Aave to adjust its protocol, which could increase costs and reduce profit margins. Overall, the outlook is positive but with some caution.

3. Governance Issues & Large Holder Influence (Potential Risk)

What’s happening: In December 2025, a vote within Aave’s decentralized autonomous organization (DAO) rejected transferring brand control to token holders by 55%, highlighting a divide between the community and the Aave Labs team. At the same time, a large investor sold 230,350 AAVE tokens (worth about $37.8 million), adding selling pressure.

Why it matters: This internal conflict could slow down important decisions, like the V4 upgrade. Also, since large holders control 58% of voting power (Cointelegraph), there are concerns about centralization, which might discourage institutional investors looking for decentralized governance.

Conclusion

Aave’s success in 2026 depends on delivering its technical upgrades and resolving governance disputes. The V4 launch and growth in real-world assets offer strong potential, but internal politics and a weak altcoin market could create challenges. Keep an eye on the DAO’s activity in early 2026 — will the 41% who didn’t vote in December get involved, or will control remain with a few large holders?

What are people saying about AAVE?

The Aave community is divided between optimistic technical signals and concerns over internal governance conflicts. Here’s what’s happening:

1. Governance dispute – The decentralized organization (DAO) and Aave Labs are clashing over $10 million per year in swap fees 🔥
2. Price targets of $180–$190 – Large investors (whales) expect a bounce due to oversold conditions 📈
3. Founder’s $15 million purchase – Aave’s founder is buying more tokens despite negative sentiment 🛡️

In-Depth Look

1. @DeFi_EzR3aL: DAO vs. Labs fee conflict heats up 🐻

“Aave Labs redirected swap fees to private wallets, effectively privatizing what should be DAO revenue.”
– @DeFi_EzR3aL (12.1K followers · 45K impressions · Dec 11, 2025, 09:00 UTC)
View original post
What this means: This is a negative sign for AAVE because it damages trust in how revenue is shared. After this news, large holders sold 230,000 AAVE tokens (worth about $37 million).

2. @bpaynews: Whales expect 14–17% price rebound 🐂

“AAVE price forecast: $179–$183 by early January 2026, driven by whale buying and an oversold RSI indicator.”
– @bpaynews (2K followers · 18K impressions · Dec 27, 2025, 12:00 UTC)
View original post
What this means: This is a positive short-term outlook. Large investors are buying AAVE between $156 and $160, which matches past price support levels.

3. @StaniKulechov: Founder buys during dip, faces criticism ⚖️

“Bought 84,000 AAVE tokens ($15 million) during the sell-off... these tokens are not used for voting.”
– @StaniKulechov (683K followers · 2.1M impressions · Dec 23, 2025, 09:25 UTC)
View original post
What this means: Mixed reactions here. The founder’s purchase shows confidence in the long-term value of AAVE, but some see it as an attempt to influence governance amid failed DAO proposals.

Conclusion

The outlook for AAVE is mixed. On one side, technical indicators like oversold RSI and whale buying suggest a potential price recovery. On the other, ongoing governance disputes and failed votes create uncertainty. Keep an eye on the $150 support level: if it holds, recovery is likely; if it breaks, prices could fall further toward $130 due to forced selling.

“Aave, one of DeFi’s leading lending platforms, is facing its biggest challenge yet — can its technical strength overcome political risks?” 🔍

What is the latest news about AAVE?

Aave is navigating the buzz around ETFs and internal governance challenges while achieving important regulatory milestones. Here’s a quick update on the latest developments:

1. Bitwise Files 11 Altcoin ETFs (December 30, 2025) – Includes AAVE, but the market reaction was muted, showing ETF announcements are becoming less exciting.
2. SEC Ends Aave Investigation (December 19, 2025) – After a 4-year review, no charges were filed, reducing regulatory uncertainty.
3. DAO Governance Dispute Heats Up (December 23, 2025) – Disagreement over control of protocol revenue caused a 10% drop in AAVE’s price.

In-Depth Look

1. Bitwise Files 11 Altcoin ETFs (December 30, 2025)

What happened: Bitwise submitted applications for 11 new ETFs focused on single cryptocurrencies, including AAVE and UNI, aiming to list on the NYSE Arca by March 2026. Each ETF would hold about 60% of the actual cryptocurrency and 40% in related financial products. Despite this big move, AAVE’s price barely changed, signaling that investors now see these filings as routine unless linked to major liquidity events (Cryptoslate).

Why it matters: This is a positive sign for long-term institutional adoption of cryptocurrencies. However, investors are now more focused on ETF fees and how these funds are distributed rather than just the filing announcements.

2. SEC Ends Aave Investigation (December 19, 2025)

What happened: The U.S. Securities and Exchange Commission (SEC) concluded its four-year investigation into Aave without taking any enforcement action. Aave’s founder, Stani Kulechov, confirmed the team fully cooperated throughout the process (pepeisfriend).

Why it matters: This clears a major regulatory hurdle, allowing Aave to focus on expanding its products, like the upcoming V4 upgrade and the Horizon Real-World Assets platform, without legal concerns. The token price dipped slightly (3%) after the announcement, likely due to some investors taking profits.

3. DAO Governance Dispute Heats Up (December 23, 2025)

What happened: Aave Labs redirected $10 million per year in fees from CoW Swap to private wallets instead of the DAO treasury. This sparked proposals to take control of the protocol’s intellectual property and branding. Early voting shows 64% of the community opposes extreme measures, but a large holder sold 230,000 AAVE tokens (worth $37 million), increasing selling pressure (CCN).

Why it matters: This conflict highlights the challenges of balancing decentralized governance with centralized decision-making. AAVE’s price dropped to $155, its lowest since April 2025, testing key support at $150.

Conclusion

Aave is balancing promising opportunities like ETF listings and regulatory clarity against internal governance struggles and broader altcoin market challenges. The protocol remains strong, generating $809 million in fees in 2025. However, the DAO’s ability to resolve disputes without damaging community trust will be crucial. The upcoming V4 upgrade in 2026 could renew institutional interest despite current governance tensions.

What is expected in the development of AAVE?

Aave’s 2026 roadmap centers on expanding decentralized finance (DeFi) with three main projects:

1. Aave V4 Public Testnet (Q1 2026) – Completing security checks and launching a system that connects liquidity across multiple blockchains.
2. Aave App Full Launch (Early 2026) – A mobile-friendly app designed to make DeFi easy for everyday users.
3. Horizon RWA Growth (2026) – Growing deposits to over $1 billion by partnering with traditional financial institutions.

Deep Dive

1. Aave V4 Public Testnet (Q1 2026)

Overview:
Aave V4 will introduce a new “Hub-and-Spoke” design that links liquidity from different blockchains into one unified system, replacing isolated pools. The code is currently being carefully reviewed and tested, with a public testnet expected in early 2026. Features include adjustable risk settings, automatic management of user positions, and more efficient transactions that save on fees.

What this means:
This is a positive development for AAVE because shared liquidity can make markets deeper, reduce price changes during trades, and attract larger institutional users. However, delays in security checks or slow adoption could impact progress.

2. Aave App Full Launch (Early 2026)

Overview:
The Aave App, which started beta testing on iOS in November 2025, aims to simplify DeFi by offering a user experience similar to traditional banking. It includes no-fee options to convert regular money (fiat) and offers up to 9% annual interest on stablecoins. The full launch plans to reach 1 million users in early 2026 (CoinMarketCap).

What this means:
This is cautiously optimistic; success depends on keeping users engaged in a competitive financial app market. If it succeeds, it could increase total value locked (TVL) in Aave and help stabilize the GHO stablecoin.

3. Horizon RWA Growth (2026)

Overview:
Horizon is Aave’s platform for tokenizing real-world assets (RWAs) like U.S. government bonds and corporate debt, currently holding $550 million in assets. Partnerships with companies like Circle, Franklin Templeton, and VanEck aim to grow deposits beyond $1 billion in 2026, tapping into a traditional asset market worth over $500 trillion.

What this means:
This is promising for long-term growth, as RWAs bring new revenue streams beyond crypto markets. However, regulatory challenges and risks of asset defaults remain concerns.

Conclusion

Aave’s 2026 plan combines technical upgrades (V4), broader user adoption (Aave App), and institutional partnerships (Horizon). While there are risks in execution, the protocol is well-positioned to grow in both decentralized and traditional finance. Could unified liquidity and real-world assets make AAVE a key player in on-chain finance?

What updates are there in the AAVE code base?

Aave’s technology is making big strides with major upgrades and new tools designed for developers.

1. V4 Protocol Launch (Q4 2025) – A new modular system that connects different markets for better cross-chain liquidity.
2. Dynamic Risk & Safety Upgrades (December 2025) – Smarter ways to manage risks and improve security.
3. SDK/API Integration (August 2025) – Easier tools for developers to build on Aave’s platform.

Deep Dive

1. V4 Protocol Launch (Q4 2025)

Overview: Aave V4 introduces a modular setup where a central liquidity “hub” links to customizable markets called “spokes.” This allows each market to set its own borrowing and lending rates and manage risk in a way that fits its users.

This replaces Aave’s old all-in-one system. Now, spokes can pull liquidity from the hub and add their own risk premiums on top of a base rate. This design supports operations across different blockchains and can handle large amounts of money, making it attractive to big institutions.

What this means: This is a positive development for AAVE because it prepares the platform to manage trillions in assets, drawing in institutional investors and making better use of capital. (Source)

2. Dynamic Risk & Safety Upgrades (December 2025)

Overview: The new liquidation system in V4 only closes enough positions to keep collateral healthy, which helps avoid big market swings. The code will also undergo formal checks and audits by security firms like ChainSecurity to catch and fix vulnerabilities.

What this means: This is neutral for AAVE — better security lowers risks for everyone, but the complexity of these upgrades might slow down adoption if any bugs appear.

3. SDK/API Integration (August 2025)

Overview: Aave has released developer-friendly tools like React and TypeScript SDKs and a GraphQL API. These make it easier for developers to connect with Aave markets and build new applications with less coding effort.

What this means: This is good news for AAVE because simpler integration can speed up growth and bring more users into the ecosystem.

Conclusion

Aave is evolving to support large-scale institutional use (with V4), improve security, and make it easier for developers to build on its platform. While debates over front-end fees continue, the technical progress is strong. It will be interesting to see how cross-chain liquidity and real-world asset (RWA) integrations influence AAVE’s position in 2026.

Why did the price of AAVE go up?

Aave (AAVE) jumped 10.56% to $165 in the last 24 hours, outperforming the overall crypto market, which rose by 2.22%. This strong performance is driven by three main factors: a new revenue-sharing plan, expansion into real-world assets (RWA), and reduced regulatory concerns after the SEC ended its investigation.

1. Revenue Sharing Proposal – Aave Labs plans to share non-protocol revenue with AAVE token holders, increasing the token’s usefulness.
2. Real-World Asset (RWA) Expansion – CEO Stani Kulechov highlighted a $500 trillion opportunity in tokenizing real-world assets.
3. Regulatory Clarity – The SEC closed a four-year investigation into Aave, removing a major source of uncertainty.

Deep Dive

1. Governance-Driven Value Boost (Positive Outlook)

What’s happening: Aave Labs wants to share revenue from products like Horizon (their RWA platform) and the Aave App with AAVE holders, pending approval through a governance vote. This means the token’s value could grow not just from lending fees but also from shared revenue.
Why it matters: Previously, AAVE’s value was mostly tied to governance rights and protocol fees. Adding revenue sharing is like giving token holders dividends, which could attract investors looking for steady returns. It also aligns the interests of developers and token holders, addressing past concerns about how value is distributed.

2. RWA Expansion & V4 Upgrade (Positive Outlook)

What’s happening: Aave aims to grow its Horizon RWA platform from $550 million in deposits to over $1 billion by 2026, focusing on attracting institutional investors. Alongside this, the upcoming V4 protocol upgrade will introduce modular design and cross-chain liquidity, making Aave a key link between decentralized finance (DeFi) and traditional finance (TradFi).
Why it matters: Real-world assets are the fastest-growing area in crypto, with big players like Franklin Templeton and Circle partnering with Aave. The V4 upgrade could reduce fragmentation in the market, allowing Aave to manage trillions in assets. CEO Kulechov said, “We’re optimizing for markets 100x larger than DeFi today.”

3. Regulatory Risk Fades (Positive Outlook)

What’s happening: On August 12, 2025, the SEC ended its investigation into Aave without taking enforcement action, which is a major relief for institutional investors.
Why it matters: With regulatory frameworks like MiCA in the EU and easing pressure in the U.S., Aave is better positioned to onboard institutions. This closure also confirms the strength of Aave’s legal setup, especially compared to competitors like Uniswap, which are still facing regulatory challenges.

Conclusion

Aave’s recent price surge reflects real progress in its revenue strategy, RWA growth, and regulatory safety—a rare combination in the DeFi space. While technical analysis shows resistance around $175 (the 50% Fibonacci retracement level), continued upward momentum depends on the approval of the revenue-sharing proposal and the expansion of Horizon.

Key point to watch: Can AAVE stay above its 30-day exponential moving average (EMA) of $167.99 to confirm a strong bullish trend?

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