Protocol: Aave community splitting

Table of Contents

network news

AAVE community split: Aave community members and participants have sharply divided in recent weeks over control of the protocol's brand and related assets, escalating an ongoing dispute over the relationship between the decentralized autonomous organization (DAO) and Aave Labs, the centralized development company that builds much of Aave's technology. This discussion has garnered a lot of attention because it cuts into a core issue facing many of crypto's biggest protocols: the tension between centralized teams that often drive decentralized governance and execution. As protocols grow and brands create value, the question of who ultimately controls those assets becomes difficult to ignore: token holders or builders. The dispute was caused by Aave's integration of a trade execution tool, CoW Swap, which resulted in swap fees flowing to Aave Labs rather than the DAO Treasury. Labs claimed the revenue reflected interface-level development work, but critics said the deal exposed deeper questions about who would ultimately control the Aave brand, which has more than $33 billion locked into the network. This question is currently at the center of a debate over ownership of Aave's trademarks, domains, social accounts, and other brand assets. Supporters of DAO management argue that the proposal would align governance rights with those who bear economic risk, limit unilateral control by private companies, and ensure that the Aave brand reflects a protocol that is managed and funded by token holders rather than a single builder. Supporters of labs that take this position counter that taking brand control away from developers can slow development, complicate partnerships and blur responsibility for operating and promoting protocols. The proposal has sharply divided community members, with opponents and supporters offering very different visions for Aave's future. — Margaux Nykerk & Shaurya Marwah read more.

Preparation for Ethereum Gramsterdam: Fresh off the success of last month's Fusaka upgrade that reduced the cost of nodes, Ethereum developers are already hard at work planning the next big change to the blockchain. Enter “Gramsteldam”. The name is a portmanteau of two simultaneous upgrades that occur in Ethereum's two core layers. The execution layer, where transaction rules and smart contracts reside, will undergo an Amsterdam upgrade, and the consensus layer, which coordinates validators and completes blocks, will undergo an upgrade known as Gloas. At the heart of Gramsterdam is enshrined the Proposer-Builder Separation (ePBS), officially tracked as EIP-7732. The proposal would build rules into Ethereum's core protocol that separate nodes that construct blocks from nodes that propose blocks, preventing a single entity from controlling which transactions are included and how they are ordered. Currently, this separation relies heavily on off-chain services known as relays, which introduces trust assumptions and centralization risks. In ePBS, block builders assemble blocks and encrypt and seal their contents, while proposers simply select the most expensive block without seeing or tampering with the contents. Transactions are only made public after the block is completed, reducing opportunities for manipulation and abuse related to MEV or the maximum extractable value. Verifiers and builders can gain additional benefits by reordering, inserting, or censoring transactions. — Margaux Nykerk read more.

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Bitcoin and quantum computing: Some Bitcoin developers are no longer debating whether quantum computing will destroy the network, instead trying to let onlookers know how long it will take to prepare if it does. This change was crystallized this week by longtime Bitcoin developer Jameson Ropp, who said that while quantum computers are unlikely to threaten Bitcoin immediately, it could take much longer than many assume if meaningful defensive changes are to be made. “No, quantum computers will not destroy Bitcoin in the near future,” Ropp posted. “We will continue to watch them evolve. But making thoughtful changes to the protocol (and unprecedented capital movement) could easily take five to 10 years.” This discussion is important because Bitcoin's value increasingly relies on long-term trust. As CoinDesk reported on Saturday, as more institutional investors treat Bitcoin as a multi-year holding, even distant technical risks could influence allocation decisions and influence the pricing of market uncertainty. — Shaurya Marwa read more.

Specific layer governance proposal: EigenLayer, the foundation behind the restaking protocol, has proposed governance changes that will introduce new incentives to EIGEN tokens, focusing on productive network activity and fee generation. The basis of the proposal, outlined in a recent blog post, is the introduction of a pricing model that returns Actively Validated Services (AVS) rewards and revenue from EigenCloud services to EIGEN holders. AVS is a blockchain-based service that uses EigenLayer security and relies on staked tokens and operators to remain honest and accurate. The team claims that this change will enhance long-term value accumulation for EIGEN token holders and better align the economics of the token with the actual usage of EigenLayer's network. “This approach aligns incentives across the ecosystem: stakers and operators who support active services earn more, AVS gains the capital it needs, and EIGEN benefits from improved tokenomics,” the blog post said. – Margaux Nykerk read more.

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In other news

Upexi (UPXI), a Nasdaq-listed crypto asset company focused on Solana, has filed to raise up to $1 billion through a shelf registration with the U.S. Securities and Exchange Commission (SEC). This move provides the company with the flexibility to raise capital by selling common stock, preferred stock, bonds, warrants, or one or more offering units over time. Based in Tampa, Florida, Upexi manages numerous consumer brands, including Cure Mushrooms pharmaceuticals and Lucky Tail pet care products. It also controls the SOL Treasury, the fourth largest among public companies, with more than 2 million tokens ($248 million) on its balance sheet. — Francesco Rodriguez read more.
The International Monetary Fund (IMF) praised El Salvador's better-than-expected economic growth in a statement. It is worth noting that this update did not include the IMF's previous indication that El Salvador, under the leadership of President Nayib Boucle, would suspend its Bitcoin accumulation strategy, which it has continued to do since negotiating an IMF loan package several months ago. In November, El Salvador deviated from its usual strategy of adding Bitcoin per day, adding more than 1,000 BTC to its treasury strategy during the month's steep sell-off. The government currently has accumulated nearly 7,500 BTC, worth about $660 million at current prices. The IMF said talks to sell the government's cryptocurrency wallet Chivo are “well advanced”. “Discussions regarding the Bitcoin project continue, with a focus on increasing transparency, protecting public resources, and mitigating risks,” the agency added. Olivier Acuña read more.

regulation and policy

The Central Bank of Russia continued to soften its stance on cryptocurrencies, presenting a proposed framework to legalize and regulate crypto transactions for both individuals and institutions. However, the company continues to warn that investing in cryptocurrencies comes with risks, including potential losses. “These are not issued or guaranteed by any jurisdiction and may be subject to increased volatility and sanctions risk,” the central bank's press release said. “When deciding to invest in crypto assets, investors should understand that they assume the risk that their funds may be lost.” The central bank also said that “digital currencies and stablecoins are recognized as financial assets and can be bought and sold but cannot be used for domestic payments.” — Olivier Acuña read more.
The Council of the European Union, the EU body that changes laws and requires governments to adopt local laws, backed the European Central Bank's plan to explore an official digital currency, calling it an evolution of money and a tool for financial inclusion. However, the Governing Council said in a post on its website that the ECB should set limits on the amount of money that can be held in online accounts or digital wallets at any one time to “avoid the use of the digital euro as a store of value” to prevent impacts on financial stability. “Holding limits are not just about financial stability in the abstract,” Edwin Mata, co-founder and CEO of tokenization platform Brecken, told CoinDesk. “The aim is to prevent the digital euro from directly competing with bank deposits. If people were able to hold an unlimited amount of digital euro, deposits could instantly shift from commercial banks to the ECB, especially in times of stress, effectively accelerating the run.” Olivier Acuña read more.

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