Marc Zeller, founder of Aave Chan Initiative, released a public report saying Aave Labs has received about $86 million in capital support since 2017, while all six standalone products launched outside Aave’s core lending protocol either failed or did not reach sustainable profitability. The report landed as the Aave community reviews another funding proposal, pushing spending efficiency and disclosure back to the center of governance debate.
Report traces capital to ICO holdings, VC rounds, and DAO grants
According to the report, Aave Labs built its funding base through three main sources: the founding team’s retained 23% share of LEND tokens from the 2017 ICO, later migrated to AAVE at a 100:1 ratio, multiple venture funding rounds, and direct grants from the Aave DAO treasury. Of the total, about $37.4 million came from the DAO.
Zeller’s report says Labs already had roughly $48.7 million in capital before receiving DAO funding. That point sits at the heart of the criticism. Aave Labs, in this framing, was not a cash-starved builder dependent on community support from the start. At the same time, the group is seeking another $51 million through the “Aave Will Win” proposal.
Six product launches failed to produce durable business results
The report’s sharpest claim is its review of Aave Labs’ broader product record. Outside the core lending protocol, Zeller says the lab’s six separate products all ended in failure or never established a sustainable revenue model. That turns the funding discussion into a performance question, not just a budget question.
For DAO delegates and tokenholders, the implication is straightforward: the entity receiving repeated allocations has not shown that it can consistently create independent value beyond maintaining or extending the core protocol’s earlier momentum.
Horizon’s scale claims and economics drew the heaviest scrutiny
Zeller’s report reserved special criticism for Horizon, Aave Labs’ RWA project. Horizon had at one point been presented publicly as having surpassed $1 billion in scale, but the report says actual RWA collateral stood at only about $135 million, with exposure heavily concentrated in a single asset. That gap, if accurate, would leave a large mismatch between public messaging and the project’s real onchain footprint.
The report also laid out a stark cost-revenue picture. Since Horizon launched in August 2025, it has generated about $216,000 in cumulative revenue for the DAO, while incentives and related costs reached roughly $5.25 million. Zeller put the return ratio at about 24:1, meaning $24 spent for every $1 in revenue.
Departure of early core developers added to governance pressure
The report says the early core developers behind Aave V1, V2, and V3.0 had already left Labs between 2021 and 2022. V3.0 is described as the last major protocol version led by Labs, with later iterations pushed mainly by DAO service providers.
That claim feeds into a broader governance challenge. If Labs is no longer the main force behind core protocol development, community members are asking why continued treasury support should flow on the same scale. Zeller also said a single large delegated address played a decisive role in passing the Horizon-related vote, raising fresh questions about how decentralized Aave’s capital allocation process really is. The discussion is unfolding as a separate $17.5 million product growth grant proposal remains under review.