A long-running governance dispute inside the Aave ecosystem has escalated after a core engineering firm announced it will step aside. Key Takeaways: Core developer BGD will not renew its contract, deepening a governance dispute between Aave DAO and Aave Labs. The conflict centers on plans to push users from Aave v3 to the upcoming v4 upgrade. The announcement rattled the market, with the Aave token dropping over 6%. Bored Ghosts Developing (BGD), a software company contracted by Aave DAO to build and maintain key components of the lending protocol, said Friday it will not renew its agreement when the current term expires in April. In a post on Aave’s governance forum, the team blamed Aave Labs, the company founded by protocol creator Stani Kulechov, for pushing a strategic shift tied to the upcoming Aave v4 upgrade . Aave Developer Refuses to Support V3 Amid Push Toward V4 BGD said it could not continue work on Aave v3 while efforts were underway to steer users toward the new version. “We believe even proposing this on the main revenue-maker & fully functional engine of Aave is borderline outrageous,” the group wrote. The market reacted quickly. The Aave token fell more than 6% following the announcement. Kulechov acknowledged the departure, writing on social media that the team had played a critical role in the protocol’s development. BGD co-founder Ernesto Boado previously served as chief technology officer at Aave Labs. “Aave V3 would not be what it is today without their contributions,” Kulechov said. Delegate Marc Zeller called the move “devastating,” noting that much of the platform’s revenue depends on BGD’s code. BGD Labs are rage quitting Aave DAO after 4 years. They built Aave v3, governance infra, Umbrella, and most core systems. Why they're leaving: – Aave Labs pivoted from independent company to central contributor pushing v4 – Aave Labs controls the brand, comms, and has voting… pic.twitter.com/MqRR105eEK — Ignas | DeFi (@DefiIgnas) February 20, 2026 Aave, with more than $26 billion in user deposits, is the largest decentralized finance lending protocol. It is governed by tokenholders through a DAO structure, but tensions have been building for months over the role of Aave Labs and control of the brand. Delegates recently sought to transfer brand assets, including naming rights, social media accounts and the aave.com website, from Labs to the DAO, though the proposal narrowly failed. Labs later offered to redirect revenue from Aave-branded services to the DAO but tied the plan to recognizing Aave v4 as the project’s future technical foundation. That clause alarmed BGD, which described Aave v3 as the ecosystem’s “crown jewel” and warned that altering lending parameters could pressure users to migrate prematurely. Aave Labs Says V3 Will Remain Supported With No Immediate Migration Aave Labs said there is no immediate timeline for migration and that v3 will remain supported. Kulechov added the company can assume maintenance duties if needed, and that the protocol will continue operating normally. BGD’s contract ends April 1. The firm has offered a short-term transition arrangement to help the DAO find a replacement, marking the first tangible break in what was once viewed as one of DeFi’s most stable governance models. Meanwhile, the US Securities and Exchange Commission formally concluded its multi-year investigation into the Aave Protocol without recommending any enforcement action. The action ends nearly four years of regulatory uncertainty surrounding one of decentralized finance’s most widely used lending platforms. The post Aave’s “Civil War” Claims First Casualty as Key Developer Walks Away appeared first on Cryptonews .
