Aave founder Stani Kulechov has confirmed that no new token will be created for Aave’s Horizon project, citing overwhelming DAO opposition.
The governance process saw a strong community backlash, with many arguing that a new token could dilute AAVE’s value and decentralization ethos.
Background
- Aave recently introduced Horizon, a proposal to integrate real-world assets (RWAs) into decentralized finance (DeFi), specifically targeting institutional adoption.
- The original Horizon proposal included the potential creation of a new token, which sparked controversy within the Aave community.
- Many AAVE token holders expressed concerns that introducing another governance token would undermine AAVE’s role and dilute its value.
- The Aave DAO initiated a governance process, starting with a temperature check (Temp Check) on Snapshot, leading to intense discussions on the Aave Governance Forum and X (formely Twitter).
- The backlash was strong enough that influential community members, including Marc Zeller of the Aave Chan Initiative, publicly stated that they would not support the proposal in its original form.
- On March 16, 2025, Kulechov clarified via X that the Aave DAO had no interest in launching a new token, and the Horizon project would continue without one.
Why should you pay attention?
- Aave DAO’s decision reinforces its decentralized governance model, showing that community members actively shape protocol decisions.
- The rejection of a new token signals strong commitment to AAVE’s value, preventing potential dilution and ensuring governance remains focused on a single asset.
- This decision may serve as a model for other DeFi projects, demonstrating that token-based fundraising or incentive models aren’t always necessary for new protocol expansions.
- Despite the rejection of a Horizon token, the push for RWAs in DeFi remains strong, with Aave likely to continue developing alternative models for institutional adoption.
- The event highlights the power dynamics in DAO governance, as the Aave community successfully halted a major proposal before it even reached a formal vote.
Who said what?
- Stani Kulechov confirmed the DAO’s decision on X, stating:
“Overall consensus across the Aave DAO is that there is no interest in other tokens. The consensus will be respected; Aave DAO is a real DAO.”
- Marc Zeller of the Aave Chan Initiative opposed the proposal early on, signaling community sentiment against token dilution. He noted:
The ACI will not support this TEMP CHECK, and we strongly encourage everyone in the Aave community to participate in this discussion.
- Lito Coen of Socket Protocol reacted positively to the decision, saying:
“Glad this got resolved, Aave turned out to be more decentralized than I thought.”
- An anonymous X user highlighted the bullish case for AAVE holders, noting:
“Aave DAO rejecting the launch of the Horizon token is a positive sign. It shows the community truly has a voice and prevents $AAVE from being diluted.”
Zooming out: The Governance Games at Play
- The failure of the Horizon token proposal reveals the power of structured DAO governance—Aave’s decision-making follows a clear process:
- Ideas begin as community discussions ("Temp Checks") on Snapshot.
- If supported, they move to an Aave Request for Final Comments (ARFC) for refinement.
- Finalized proposals become Aave Improvement Proposals (AIPs) for on-chain voting.
- The Horizon token proposal failed before even reaching the AIP stage, showing that the DAO’s informal governance mechanisms were strong enough to block a contentious idea early on.
- AAVE holders—who wield governance power based on their token stakes—used their influence to stop a proposal they believed was against their interests.
- The broader DeFi space is closely watching how DAOs manage governance conflicts, as similar concerns around token dilution and decentralization arise across other projects.
- While Horizon as a product remains under discussion, the governance process has cemented AAVE’s position as the protocol’s sole governance token and prevented any moves that could threaten its utility.
