Aave’s “Civil War” Sees Initial Departure as Major Developer Exits

A prolonged governance conflict within the Aave ecosystem has intensified following an announcement from a key engineering firm indicating it will withdraw its involvement.

Key Takeaways:

• Core developer BGD will not extend its contract, exacerbating a governance dispute between Aave DAO and Aave Labs.
• The disagreement revolves around initiatives to transition users from Aave v3 to the forthcoming v4 upgrade.
• The news unsettled the market, resulting in a more than 6% decline in the Aave token.

Bored Ghosts Developing (BGD), a software firm engaged by Aave DAO to create and sustain essential elements of the lending protocol, announced on Friday that it will not renew its contract when the current term concludes in April.

In a message posted on Aave’s governance forum, the team attributed the decision to Aave Labs, the organization established by protocol founder Stani Kulechov, for advocating a strategic change related to the impending Aave v4 upgrade.

Aave Developer Declines to Support V3 Amid Shift Toward V4

BGD stated it could not proceed with Aave v3 while efforts were being made to direct users toward the new version.

“We find it nearly outrageous to propose this on the main revenue-generating and fully operational engine of Aave,” the group commented.

The market responded swiftly, with the Aave token dropping over 6% after the announcement.

Kulechov recognized the departure, noting on social media that the team had been instrumental in the protocol’s evolution.

BGD co-founder Ernesto Boado previously held the position of chief technology officer at Aave Labs.

“Aave V3 would not have reached its current state without their contributions,” Kulechov remarked. Delegate Marc Zeller described the situation as “devastating,” emphasizing that a significant portion of the platform’s revenue relies on BGD’s code.

BGD Labs are exiting Aave DAO after 4 years.
They developed Aave v3, governance infrastructure, Umbrella, and most core systems.
Reasons for their departure:
– Aave Labs shifted from an independent entity to a central contributor advocating for v4
– Aave Labs manages the brand, communications, and holds voting… pic.twitter.com/MqRR105eEK

— Ignas | DeFi (@DefiIgnas) February 20, 2026

Aave, which has over $26 billion in user deposits, stands as the largest decentralized finance lending protocol.

It is governed by tokenholders through a DAO framework, but tensions have been escalating for months regarding the role of Aave Labs and brand control.

Delegates recently attempted to transfer brand assets, including naming rights, social media accounts, and the aave.com website, from Labs to the DAO, although the proposal narrowly failed.

Labs subsequently proposed to redirect revenue from Aave-branded services to the DAO but conditioned the plan on acknowledging Aave v4 as the project’s future technical foundation.

This stipulation concerned BGD, which characterized Aave v3 as the ecosystem’s “crown jewel” and cautioned that modifying lending parameters could unduly pressure users to transition prematurely.

Aave Labs Asserts V3 Will Continue to Be Supported Without Immediate Migration

Aave Labs stated there is no immediate schedule for migration and that v3 will continue to be supported. Kulechov added that the company can take on maintenance responsibilities if necessary, and that the protocol will keep functioning normally.

BGD’s contract concludes on April 1. The firm has proposed a short-term transition plan to assist the DAO in finding a replacement, marking the first significant fracture in what was once regarded as one of DeFi’s most stable governance frameworks.

In the meantime, the US Securities and Exchange Commission has officially wrapped up its multi-year investigation into the Aave Protocol without recommending any enforcement actions.

This conclusion ends nearly four years of regulatory ambiguity surrounding one of decentralized finance’s most utilized lending platforms.

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