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Decentralized Autonomous Organizations (DAOs) like Scroll aim to replace traditional hierarchies with transparent, token-based decision making, but they can run into problems with leadership skill gaps and an inability to find consensus among disparate individuals. Governance within DAOs can be messy, and spill over into social media forums. Scroll, a Layer 2 scaling network, is currently facing governance challenges, prompting Aave, a decentralized lending protocol to propose risk-reducing measures for its V3 lending pool on Scroll amid the uncertainty.
Scroll’s DAO lead resigned this month, and the community announced a pause on new proposals while it redesigns its governance model. In a statement on Scroll’s official X account, the team confirmed that accepted proposals will still move forward. The update described the pause as an opportunity to “evolve responsibly” with clearer processes for lasting stability.
Aave deployed on Scroll in 2023. The estimated risk was about $6 million, concentrated in one of its smaller pools. In response, the Aave Chain Initiative (ACI) proposed several risk adjustments for the Aave V3 Scroll instance, including:
Independent reviewers appear to support the move, with some calling it a “measured step” that protects users without causing sudden disruption.
Aave (AAVE) is the native token for the Ethereum-based Aave money market that now operates on multiple chains. Launched in 2017, Aave was among the first protocols to focus on decentralized lending. The protocol allows users to borrow or earn interest loaning various stablecoins and altcoins. Smart contracts are leveraged to reduce paperwork and the reliance on intermediaries with token holders of the AAVE cryptocurrency to vote on protocol changes.
Last month Aave Labs announced it was moving into real-world assets (RWAs) , launching Horizon, a lending market for commercial and qualified users to borrow stable coins against RWAs. The company says its platform is designed to make real-world assets usable within decentralized finance, with a focus on meeting compliance requirements for regulated institutions.
Here are some of the key other developments that have shaped Aave’s trajectory in 2025 to date:
Aave is a top 50 token with over 40 billion in total value locked (TVL). The team reacted quickly to the Scroll situation reassuring their ecosystem.
For Scroll, episodes like this show that DeFi risk goes far beyond token prices. Governance strength, liquidity conditions, and network health all influence whether protocols endure or stumble.
To learn more about how DAOs work, where they succeed, and where they struggle, explore our related article DAOs Explained: What Works, What Fails, and What’s Next.
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