'DAOs aren't dead, they should evolve': Aave CEO Stani Kulechov pushes for streamlined execution

In light of recent governance disputes, Aave founder Stani Kulechov is making his case for the path forward for Aave, including the evolving nature of the Aave DAO, designed, in theory, to give AAVE token holders a say in the protocol’s direction. 

On Tuesday on X, Kulechov argued that Aave — already the largest decentralized lending protocol by a significant margin — needs to adapt if it is to capture any part of the multi-trillion dollar global lending market. 

“I'm going to say something that many founders in crypto think, but very few will say publicly,” Kulechov wrote. “DAOs, as we've been running them, are extraordinarily difficult, and not in the way that building hard things is difficult. They're difficult in the way of fighting your own organizational structure every single day.”

In addition to the “slow DAO” governance process that can bog down decision-making with “weeks of forum posts, temperature checks, and multiple votes,” all while potential competitors are iterating, Kulechov argued that DAOs have a habit of becoming politicized.

“Participants take sides, lean toward the loudest voices, and form political alliances to get their own proposals passed later. Just as large companies end up with managers instead of founders, DAOs end up with politicians. That skill doesn't help you innovate or run an economic unit efficiently, and when politicians win, it's game over for builders,” he wrote. 

DAO governance tensions spill into debate

Kulechov’s remarks come in the wake of a recent governance shakeup across the Aave community, the denouement of a months-long debate over which entities ought to govern the largest crypto lending protocol, and following the publication of Kulechov’s controversial “Aave Will Win” proposal in January. 

Historically, several organizations have contributed to the Aave protocol, including Aave Labs, the for-profit startup founded by Kulechov, BGD Labs, a core technical contributor to the DeFi protocol, and the Aave Chan Initiative (ACI), a leading service provider for the Aave DAO.

In recent weeks, however, BDG and ACI both announced they were departing the protocol amid a conflict with Aave Labs. Both entities raised concerns over the Aave Will Win proposal, which pushed to redirect community resources to develop Aave v4, while also changing the funding model for Aave Labs, arguably turning the company into a quasi-DAO subsidiary. 

Marc Zeller, founder of ACI, argued that while the proposal seemed virtuous, it was also a sign that Aave Labs had concentrated governance power over the protocol and could essentially approve any funding model it requested, even if the proposal granted the Aave DAO ownership over key brand and trademark assets.

Ironically, the Aave Will Win proposal itself was a response to conversations between Aave Labs and Aave DAO, which had taken issue with Aave Labs unilaterally redirecting an Aave frontend revenue stream to a corporate-controlled wallet last year. 

“It can often feel like we took the worst parts of corporate bureaucracy and removed the parts that create accountability in the name of decentralization,” Kulechov wrote on Tuesday in a subsection titled "DAOs are not dead, they should evolve."

The role of tokenholder governance

In his post, Kulechov noted that Aave Labs has taken steps recently to streamline its operations, including spinning off the Avara umbrella brand, which housed the Lens web3 social media project and its Family wallet unit. It has also simplified its offerings to Aave App, Aave Pro, and Aave Kit, representing a “focused product layer.”

While Kulechov argues that Aave needs to remain nimble, which in part means reducing the slow governance procedures that have come to define what he referred to as “the most mature DAO in DeFi,” the founder still sees a place for tokenholders to contribute to protocol development. 

“Governance should focus on what genuinely requires collective input, like major protocol changes and treasury strategy. Everything else is execution, and execution requires leaders in an organization,” Kulechov wrote. “The rules should stay in the code, the treasury should stay visible to everyone, and token holders should keep safeguards on major decisions.”

Indeed, following Zeller’s announcement that ACI was departing, many community members noted that DAOs may be a relic of crypto history, which prioritized flatter governance structures over top-down centralized control.

It's clear that ACI and Marc had a tangible impact on Aave, but this outcome felt inevitable given regulatory and operational shifts away from DAOs for the last few years,” Maximum Frequency founder Neil Harounian wrote on X at the time. “There’s usually only one CEO or face of a successful company, even more pronounced when it's founder-led.”

It was a point echoed by Confetti founder David Phelps, who noted that “nation states should be DAOs, private companies should not.”

“The only success path now is for Stani Kulechov to consolidate the AAVE brand under a more traditional org structure,” Tally’s Dennison Bertram added. 

Indeed, if there’s one point Kulechov seems preoccupied with, it’s that Aave needs to continue executing if it is “to rearchitect all the world's lending infrastructure,” in the same way Google reorganized “all the world's information.”

“There will be more hard decisions ahead, but we now have a good foundation and multi-decade vision for Aave that is fully $AAVE token centric, which matters to me more than anything else,” Kulechov said. “And in true Aave fashion, we’re looking to pioneer a model where revenue will come from both the protocol and product layers, vertically and horizontally.”