Aave DAO's Clash with MakerDAO Sparks Concerns of DeFi Division

Aave DAO's Clash with MakerDAO Sparks Concerns of DeFi Division

EconomyBlockchain

By Jakub Lazurek

05 Apr 2024 (3 months ago)

2 min read

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Aave and MakerDAO face-off stirs fears of fragmentation in DeFi world

Aave DAO's recent actions against MakerDAO have raised alarms about creating exclusive zones in DeFi. This includes potentially excluding Spark protocol users from Aave DAO airdrops. These moves are part of Aave's effort to keep its community united.

Gauntlet ended its association with Aave DAO after allegations of working with competitors, at the same time Aave introduced a "protocol embassy" for better governance token management. Aave also excluded Morpho Aave optimizer users from its airdrop, citing revenue loss to Aave's foundational protocol.

Furthermore, Aave proposed setting the loan-to-value ratio for MakerDAO’s DAI to 0%, limiting its use as collateral.

These steps underline Aave DAO's focus on loyalty, hinting at a possible fragmented DeFi ecosystem.

The Aave Chan Initiative, led by Marc Zeller of Avara, has been at the forefront of these initiatives. Zeller defended the actions, stating they align with Aave DAO's goals of optimizing profit distribution and fostering protocol synergies.

MakerDAO's controversial proposal to invest heavily in Ethena's tokens led Aave to consider severing ties with DAI as collateral.

The dispute intensified with Aave's founder and Zeller suggesting a total disengagement from DAI. Zeller further proposed marking Spark as non-aligned, blocking its users from Aave DAO airdrops.

Sam MacPherson of Phoenix Labs commented on the decision, recognizing it as Aave DAO's right. The ongoing dispute has concerned the broader DeFi community about the risks of division between major DeFi players.

Figures like Martin Köppelmann and Matt Fiebach highlight the importance of cooperation and shared goals in DeFi, warning against the dangers of isolationism.

This situation marks a critical juncture for DeFi, stressing the need for open collaboration over creating isolated ecosystems that could stifle the sector's potential.

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