For months, Aave, one of decentralized finance’s (DeFi) largest lending protocols, has been at the center of a very public debate about what it is supposed to be.

At the core, much of the community wants the network to be a decentralized financial layer governed by token holders, while a fraction of it warns that it is evolving toward a more coordinated model shaped by major contributors.

In simple terms, the debate is about whether Aave should remain a neutral, open platform anyone can build on, or move toward a more structured model where key contributors play a bigger role in shaping products and capturing revenue — a shift that could impact how decentralized the protocol is and who benefits from its growth.

After a turbulent stretch marked by governance disputes, contributor exits and a sweeping strategic overhaul, the founder of the main developer firm supporting the network, Stani Kulechov, is framing the moment not as a breakdown, but as a necessary evolution.

“We’ve been doing this for almost a decade,” the Aave Labs founder told CoinDesk. “Finance is a big set of infrastructure… it takes time to replace.”

A debate that started with fees

The latest chapter began late last year with what seemed like a technical issue: interface fees.

In December 2025, discussions over whether revenue generated by Aave’s front-end interfaces should flow back to the DAO — the decentralized autonomous organization that the decentralized autonomous organization that oversees Aave’s governance and treasury — exposed deeper disagreements about value capture. The DAO pushed back against proposals that would divert fees away from its treasury, surfacing tensions over incentives and control that had been building for years.

Those tensions escalated in February when Aave Labs introduced a proposal called “Aave Will Win.”

At its core was a simple idea: all revenue generated by Aave-branded products should ultimately flow back to the DAO. The proposal leaned toward a more coordinated approach between the protocol and the products built around it. “We’re becoming token-centric… but we recognize the value comes from both the protocol layer and the product layer,” Kulechov said.

Aave Labs is a key development contributor but does not control the DAO, which is governed by token holders; however, its proposals and products can influence how value flows through the ecosystem, including revenue directed to the DAO treasury.

Rather than resolving tensions, the proposal intensified them.

In early March, the Aave Chain Initiative (ACI), one of the DAO’s most active governance groups, announced it would shut down after clashing with Aave Labs over the plan. The group had driven a majority of governance activity over the past several years, making its departure particularly notable.

The dispute centered on concerns that the proposal blurred the line between independent DAO governance and the influence of major contributors. Some critics argued that the voting process raised questions about how decentralized decision-making truly is in practice.

ACI’s exit followed the earlier departure of BGD Labs, a key engineering contributor behind Aave v3, which cited strategic disagreements. Together, the moves highlighted a recurring tension in decentralized systems: while protocols are governed onchain, much of the development and coordination still depends on a relatively small group of contributors.

Kulechov, however, sees the churn as part of a normal cycle.

“I don’t think it changes much… this is very normal,” he said, pointing to similar transitions throughout Aave’s history.

A technical upgrade in the background

Running parallel to the governance overhaul is Aave’s next major protocol upgrade, known as v4. The upgrade has been in development for roughly two years and is now nearing launch after an extended period of security testing and governance review. While separate from the recent governance disputes, it represents one of the most significant technical changes to the protocol to date.

At a high level, v4 is expected to introduce a more modular architecture that allows new use cases and integrations to be built more easily on top of Aave’s core infrastructure. The design also aims to improve capital efficiency and expand the types of assets that can be used within the protocol.

While v4 itself has not been the central point of dispute, its rollout comes as the DAO continues to debate how value generated from new products and infrastructure should be distributed across the ecosystem.

Its rollout comes at a moment when Aave is not just refining its governance and economic model, but also upgrading the underlying system itself — setting the stage for its next phase of growth.

DeFi’s next phase

The debate around Aave comes as the broader DeFi sector faces renewed scrutiny.

After the explosive growth of previous cycles, activity has cooled, and questions about the sector’s long-term relevance have resurfaced. Critics point to governance disputes and declining yields as signs that the model may be faltering.

Kulechov disagrees. “DeFi is stronger than ever,” he said, pointing to tens of billions in deposits still locked across the ecosystem.

What is changing, he argues, is where growth will come from. Rather than purely crypto-native use cases, the next phase of DeFi is likely to be driven by real-world financial activity — from institutional lending to tokenized assets.

“Every bank has a digital asset team,” he said. “Once you tokenize assets, you need utilities.”

In that vision, DeFi doesn’t replace traditional finance overnight. Instead, it becomes part of its infrastructure — embedded in the backend of fintech platforms and financial institutions.’

Aave’s recent governance disputes and contributor changes highlight an ecosystem in transition.

Efforts to evolve the ecosystem have introduced new coordination challenges, even as they reflect a broader shift across DeFi where protocols try to align with the applications built on top of them.

“This is just part of building better financial systems,” Kulechov said.

Read more: Aave labs proposes ‘Aave Will Win’ plan to send 100% of product revenue to DAO

World Foundation disclosed that its token issuance unit, World Assets, completed $65 million in over-the-counter sales of WLD tokens. 

The update came as WLD traded near its recent low and as the market watched future token supply.

World Assets said it sold WLD tokens to four counterparties over the past week. The first settlement took place on March 20, and the average sale price came to about $0.2719 per token.

That pricing means the sales covered roughly 239 million WLD tokens in total. World Foundation also said $25 million worth of the sold tokens carry a six-month lockup period, while the remaining settlements will move through a designated World Assets multisig wallet.

According to the disclosure, World Assets will use the proceeds for core operations, research and development, orb manufacturing, and ecosystem development. The statement gave the market a clearer view of how the foundation plans to use the newly raised funds.

The disclosure followed on-chain data flagged by Lookonchain on March 21. The analytics firm tracked a transfer of 117 million WLD tokens, valued at about $39 million, to Binance and FalconX, with about $35 million in USDC received in return. That transaction appears to match part of the broader OTC activity later disclosed by the foundation.

In addition, the latest sales came at a much lower price than earlier WLD funding rounds. In May 2025, the project raised $135 million through a WLD sale to backers including Andreessen Horowitz and Bain Capital Crypto, at a time when WLD traded near $1.13.

Earlier, in April 2024, the then-named Worldcoin Foundation said it planned to sell between 0.5 million and 1.5 million WLD per week through private placements to institutional trading firms. At that time, WLD traded near $5.43, which places the new average sale price far below earlier levels.

Market watches price pressure and future token supply

WLD traded near $0.27 at publication time after falling to an all-time low of $0.2444 earlier Saturday. The token is down about 97% from its March 2024 peak near $11.82. Its market cap stood near $850 million, while its fully diluted valuation was about $2.7 billion.

The market is also watching a large token unlock scheduled to begin on July 23, 2026, according to DefiLlama data. The event covers about 52.5% of the total 10 billion WLD supply and equals roughly 169% of the current float. 

Eightco Holdings, which launched a WLD treasury in September 2025, held 277 million WLD as of March 20.

Ether’s (ETH) grip on the cryptocurrency market’s number-two spot is weakening, not because it is getting any closer to overtaking Bitcoin (BTC), but because the stablecoin economy is booming.

Key takeaways:

Ethereum’s No. 2 ranking at risk in 2026

In the past five years, Ether has vastly underperformed its top competitors for the no. 2 spot, primarily Tether’s stablecoin USDT (USDT).

On a five-year rolling basis, ETH’s market capitalization grew by roughly 11.75% to around $240 billion.

In comparison, USDT, the third-largest cryptocurrency, grew 622.50% in the same period, with its market cap reaching over $184 billion. Even XRP (XRP) and USD Coin (USDC) have outperformed Ether’s growth.

As a result, more traders are betting on Ethereum’s flippening in 2026.

On Polymarket’s betting platform, for instance, over 59% of punters placed bets in favor of Ether losing the number-two spot in 2026. These odds were just 17% at the year’s beginning.

Why has Ethereum lagged behind Tether?

Ethereum and Tether grow differently because one is crypto, the other is fiat.

Ethereum’s market value depends largely on ETH’s price rising, and that has been difficult to sustain in 2026 as crypto markets come under pressure from macro headwinds such as US tariffs, the US and Israel vs. Iran war, and fading expectations for Federal Reserve rate cuts.

That weakness has also been reflected in institutional demand. US spot Ethereum ETFs saw assets under management fall by about 65%, dropping to $11.76 billion in March from $31.86 billion in October last year, underscoring how the appetite for ETH has decreased over the past few months.

Tether, by contrast, grows when capital flows into stablecoins and investors buy “crypto dollars.” That tends to happen when traders want safety, liquidity, or flexibility instead of exposure to volatile assets like ETH.

Related: AI and stablecoins are winning despite 2026 crypto market slump

The total stablecoin market is now worth $310 billion, compared to around $5 billion in 2020, with Tether’s share at 58%.

Demand for this kind of “dry powder,” capital parked in a dollar-pegged asset while investors wait for better crypto entry points, usually stays firm during risk-off periods.

Ethereum needs a stronger risk appetite to lift ETH’s price, while Tether benefits when investors turn defensive. That helps explain why ETH market cap growth has lagged behind USDT despite remaining one of crypto’s core infrastructure assets.

Can the ETH price fall further in 2026?

From a technical perspective, Ether faces risks of further price declines in 2026.

As of Sunday, it was trading inside what appears to be a “bear flag” pattern, which increases the odds of resolving to the downside, given the price breaks decisively below the structure’s lower trendline.

ETH price risks falling toward the flag’s measured downside target at around $1,250 by June if the breakdown below the lower trend line persists.