Aave's governance token experienced a $500 million market cap drop in December 2025 due to a conflict between its DAO and Aave Labs. The dispute, highlighted in a Santiment report, revolved around control of revenue streams and brand assets, challenging decentralized governance. The conflict began when DAO members discovered swap fees from a CoW Swap integration were directed to Aave Labs instead of the DAO treasury, sparking a debate over governance rights. Despite the turmoil, large investors capitalized on the situation, increasing their holdings. The top 100 AAVE addresses raised their supply share from 72% to 80% in December, while exchange balances decreased, indicating long-term storage. Aave Labs' willingness to share external revenue with token holders has improved sentiment, with AAVE trading at $178, up 5% in 24 hours. The situation remains a test for Aave's governance model as discussions continue.