Even after four months following a steep decline from its all-time high exceeding $126,000, the sentiment around Bitcoin remains delicate. The inability to recover has heightened concerns about a potential crypto winter. However, Matt Hougan, Chief Investment Officer at Bitwise, asserts that decentralized finance (DeFi) could play a pivotal role in shifting the market out of this bearish cycle, especially as investors increasingly focus on core fundamentals like genuine user engagement, revenues, and sustainable values.

Aave at the Core

In a recent statement, Hougan referred to a governance proposal issued by Aave Labs titled “Aave Will Win,” indicating that it exemplifies a hopeful turning point for DeFi during this period. He noted that DeFi platforms such as Uniswap and Aave have matured into substantial enterprises, with Uniswap occasionally outpacing Coinbase in spot trading volume and Aave generating over $100 million in annual revenue.

Despite these achievements, DeFi tokens have notably lagged. This situation largely stems from their initial design as governance tokens, which grant voting rights without providing any direct stake in protocol revenues. Hougan explains that this structure emerged as a defensive strategy against regulatory scrutiny, particularly from the US Securities and Exchange Commission (SEC), which utilizes the Howey test to determine whether tokens are securities.

The Bitwise executive elucidated that Aave seeks to tackle this concern through its upcoming ‘Aavenomics’ upgrades slated for 2024 and 2025, which will implement token buybacks funded by protocol fees. Yet, tensions persist as Aave Labs retains the ability to allot certain revenues to itself, a scenario highlighted in December 2025 when it allocated $10 million in swap fees towards developing its company.

The new “Aave Will Win” proposal aims to rectify these issues by pledging that Aave Labs will allocate 100% of all revenue from Aave-branded products, including the website, mobile application, card, and institutional services, directly to the DAO treasury managed by token holders. In exchange, Aave Labs would receive a funding allocation comprising stablecoins, Aave tokens, and milestone-based grants estimated at around $50 million, aimed at advancing Aave V4 and transferring intellectual property to the community.

This initiative could transform the Aave token from merely a governance medium to an asset with a direct entitlement to revenues, positioning the founding team as service providers accountable to token holders, according to Hougan.

Community Concerns

Nonetheless, the proposed plan has faced backlash from some community members who consider the funding request to be extravagant or argue that various aspects should not be combined. Additionally, there are still unresolved issues regarding how revenue will be defined and overseen. Hougan acknowledged these reservations as “legitimate” but expressed optimism that Aave’s initiative might encourage similar actions from other digital assets.