BGD Labs Ends Collaboration with Aave

BGD Labs Exits Aave Collaboration

BGD Labs, a key technical developer of the decentralized finance (DeFi) platform Aave, has announced the end of its collaboration due to structural changes in the DAO (decentralized autonomous organization). The mutual agreement concludes on April 1.

Founded in 2022, BGD Labs played a significant role in the creation and maintenance of the Aave v3 protocol infrastructure, a crucial component of the ecosystem providing governance and the Umbrella safety module.

Reasons for Terminating the Agreement

According to BGD Labs, the main reason for ending the collaboration is due to organizational changes within Aave Labs. The company seeks to regain full control, which, according to BGD, threatens the principles of decentralization. Aave Labs has started actively working on protocol v4, controlling the brand, communications, and obtaining a majority of the governance votes.

Current State of the Platform

According to the company, the main DeFi systems of the Aave platform are in a stable state, allowing them to function without significant changes. BGD Labs also stated that it will publish documentation and maintenance guides to enable other participants to assume these responsibilities.

Competition in the DeFi Market

According to DeFiLlama data, Aave holds a leading position in the decentralized finance segment with a total value locked (TVL) of 25.79 billion dollars. It is followed by Lido with 18.34 billion dollars and Eigen, ranking third with 9.16 billion dollars.

Impact on AAVE Token

The AAVE token has depreciated by more than 5% in the last 24 hours, trading around $117, significantly below its historical peak reached in 2020. This decline highlights the volatility caused by organizational changes.

Conclusion

The departure of BGD Labs from Aave presents potential risks for the platform. Centralization may contradict the core principles of DeFi.

• Strengths: Stable current state of the system.
• Risks: Centralization and control may lead to loss of community trust.
• Opportunities: Other participants may take up BGD Labs' roles.
• Threats: Moving away from decentralization principles may decrease competitiveness.

Transformations within Aave require close observation of their potential impact on the entire DeFi ecosystem.

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