Aave [AAVE] has been in the spotlight lately, and not entirely for price gains.
A public clash between its DAO and Labs has spooked the market lately. But there’s more to this than you think, and it may matter more than the headlines suggest.
A sentiment reset
Aave’s price took a hit in December, with a public dispute between the DAO and Aave Labs shaking confidence. This has wiped roughly $500 million off its market cap, per Santiment.
Source: Santiment
Price slid while negative sentiment spiked, but that mood didn’t last. As January began, sentiment turned. Positive mentions started to outweigh the negative ones, just as the market stopped making lower lows.
Perhaps traders are reacting more to signs that both sides are moving toward a resolution. While price hasn’t fully caught up yet, it looks like the worst of the uncertainty may already be priced in.
The numbers don’t lie
Spikes in daily active addresses and short bursts of network growth appeared right around AAVE’s local price lows in late December. Activity stayed steady and at times even picked up.
Source: Santiment
Circulation increased during the market dips, indicating that tokens were being actively repositioned.
Since the beginning of January, prices have trended higher, supported by strong buying activity in the background. While headlines highlighted governance drama, the network itself continued to operate without disruption.
The foundations never really broke
All of this matters because, despite the controversy, the core business has stayed solid. TVL is still around $36 billion, only modestly off its peak, and well above mid-year levels.
The stability is difficult to ignore.
Source: DeFiLlama
Fees are strong too, with annualized protocol fees near $700 million; this means steady revenue for the system.
Users have continued to stay engaged, and capital has not exited in large volumes. This resilience helps explain why both sentiment and price are beginning to recover.
If the DAO‑Labs dispute is resolved cleanly, Aave will be positioned to move forward with minimal damage.
Final Thoughts
- AAVE lost $500M in market cap, but the protocol itself never cracked.
- The DAO-Labs dispute is NOT a structural failure.
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Author: Samyukhtha L KM
