Aave and the maturation of DeFi.

DeFi is often described as a fully decentralized financial system, without central intermediaries. In practice, that picture becomes more complex as some DeFi protocols grow into infrastructure through which billions of dollars flow. The situation around Aave illustrates this shift clearly.

Aave is one of the largest lending platforms in crypto. Users can lend and borrow digital assets through smart contracts. The protocol is not governed by a traditional company, but by a so called DAO, short for Decentralized Autonomous Organization. In this structure, token holders collectively vote on key decisions, such as protocol upgrades or the use of funds.

At the same time, the software behind Aave is built and maintained by Aave Labs. This organization employs developers and operates within legal and operational frameworks. That setup worked well when Aave was primarily used by early adopters and individual users.

When responsibility and control diverge

As Aave is increasingly used by professional and institutional participants, expectations change. These parties require clarity around accountability, risk management and legal responsibility. In practice, they engage with Aave Labs, not with a DAO of token holders.

This means Aave Labs carries growing responsibility toward external parties, while formal control over the protocol remains with the DAO. Decisions with significant legal or operational impact are therefore not always made by the entity that bears the responsibility.

This tension is not unique to Aave. It reflects a broader transition within DeFi. Full decentralization works well in an experimental phase, but once a protocol becomes financial infrastructure, clearer governance structures become necessary. Questions around who decides, who bears risk and who can intervene become unavoidable.

The situation at Aave shows that DeFi is entering a new stage. Not by abandoning decentralization, but by evolving beyond the idea that token governance alone is sufficient. In that sense, Aave sets an important precedent for how DeFi may mature into durable financial infrastructure.