BGD Labs Announces Exit from Aave DAO Amid Governance Disagreements
April 1, 2026 – The end of a four‑year partnership between one of Aave’s core development teams and the protocol’s DAO is set to arrive after a series of strategic rifts over the upcoming Aave V4 upgrade.
What happened?
BGD Labs, a leading contributor to the Aave codebase and infrastructure, released a blog post on the Aave governance forum stating that it will cease its formal work with the Aave DAO once its current contract expires on April 1, 2026. The decision follows “fundamental disagreements” about the direction of the protocol, particularly the emphasis placed on the development and promotion of Aave V4.
According to the post, BGD entered the partnership believing that V4 would complement the mature V3 ecosystem. Over time, however, the team observed a shift in Aave Labs’ messaging that they describe as a “relentless criticism” of V3 in order to accelerate adoption of V4. While V4’s testnet debuted in November 2025 with a new hub‑and‑spoke architecture intended to overhaul DeFi lending, V3 remains the version that most users and lenders are actively employing.
BGD emphasized that the split is not driven by technical failures. Many of the bugs and inefficiencies it flagged in 2022 have been addressed, and the firm still regards V3 as a “solid and future‑proof” platform with governance that “just works.” The group said it will finish ongoing tasks and then transition its responsibilities to other contributors within the ecosystem.
Market reaction
The news coincided with a modest dip in AAVE’s market price, which hovered around $118, down roughly 3 % in the last 24 hours. Marc Zeller, founder of the Aave Chan Initiative (ACI), posted on Telegram—originally in French—that BGD’s departure “changes everything.” Zeller also disclosed that he has sold a portion of his AAVE holdings, a move that attracted further attention from traders.
Why the tension?
- Governance focus on V4 – Aave Labs has been urging the community to shift liquidity and developer effort toward V4, even though V3 still carries the bulk of the $26.8 billion TVL reported by DeFiLlama.
- Perceived de‑valuation of V3 – BGD argues that the narrative around V3 has become increasingly negative, risking the stability of the current lending market.
- Strategic autonomy – By ending the formal contract, BGD retains the freedom to allocate resources elsewhere, possibly to other DeFi projects or independent consulting work.
Potential implications for Aave
| Area | Possible outcome |
|---|---|
| Development pipeline | With BGD stepping back, other teams will need to absorb its open‑source contributions, which could cause short‑term delays in bug‑fixes or feature roll‑outs. |
| V4 rollout | The heightened focus on V4 may accelerate its migration path, but the loss of a major engineering partner could also expose gaps in testing and audit coverage. |
| Community confidence | Public dissent from a core contributor may fuel skepticism among token holders and lenders, potentially influencing future governance proposals. |
| Governance dynamics | The episode highlights a growing divide between the DAO’s elected body and the developer community, prompting calls for clearer alignment mechanisms. |
Key take‑aways
- BGD Labs will terminate its formal relationship with the Aave DAO on April 1, 2026, citing strategic and governance differences rather than technical failures.
- The core of the dispute centers on the emphasis placed on Aave V4, with BGD feeling that V3’s achievements are being unduly downplayed.
- Aave’s market price reacted modestly, and the departure sparked commentary from influential community members like ACI founder Marc Zeller, who also disclosed token sales.
- Future development will rely on other contributors, and the Aave community may need to reassess its roadmap and governance processes to maintain momentum.
- Investors should monitor how the transition affects the protocol’s upgrade schedule, TVL retention, and overall sentiment within the DeFi ecosystem.
As Aave navigates this internal schism, the broader DeFi market will be watching closely to see whether the protocol can sustain its leadership position without one of its most prominent engineering teams.
Source: https://thedefiant.io/news/defi/bgd-to-leave-aave-citing-governance-tensions
