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A remarkable report regarding the past performance and funding of the Labs unit within the Aave ecosystem, one of the leading decentralized finance (DeFi) protocols, has been publicly released.
A report published by Marc Zeller, founder of ACI, an organization contributing to the Aave ecosystem, raises significant questions about Aave Labs’ funding history, token distribution, and product performance to date.
According to the report, Aave Labs has received approximately $86 million in capital support since 2017, including ICO funding, venture capital investments, and direct grants from the DAO. The founding team held 23% of the LEND tokens during the 2017 ICO, which were subsequently converted to AAVE tokens at a 100:1 ratio.
The document also states that Labs had a capital base of approximately $48.7 million before receiving funding from the DAO, and subsequently received approximately $37.4 million in grants from the DAO. Despite this, Labs is currently seeking an additional $51 million in funding under its “Aave Will Win” proposal.
The most striking part of the report was Labs’ assessment of the performance of independent products outside the core protocol. Allegedly, all six independent products developed, excluding the core credit protocol, either failed or were not profitable.
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The Horizon project, particularly its focus on real-world assets (RWA), was cited as an example. While Horizon reportedly exceeded $1 billion in size at launch, it was noted that it actually held approximately $135 million in RWA collateral, largely concentrated in a single asset. Launched in August 2025, the project has generated approximately $216,000 in revenue for the DAO to date, while incentives and related costs amounted to approximately $5.25 million; this is said to indicate a negative return of roughly 24 to 1.
The report also notes that early core developers who worked on Aave V1, V2, and V3.0 left Labs between 2021 and 2022. V3.0 is described as the last major release developed under Labs’ leadership, with subsequent versions largely driven by DAO service providers.
Furthermore, it was noted that the adoption of the Horizon proposal by a single large delegation played a critical role, sparking new debates within the community regarding the centralization of governance and the efficiency of fund utilization.
These criticisms coincided with the $17.5 million in new product growth grant proposals currently under consideration. This further intensified ongoing debates within the Aave community regarding funding allocation, performance reporting, and governance transparency.
*This is not investment advice.
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