How Aave Could Help End the Crypto Winter, According to Bitwise

The Bitwise exec said Aave’s governance proposal stands out as a positive development for DeFi during the crypto downturn.

Even four months after the massive drop from a record price above $126,000, sentiment around Bitcoin remains fragile. Its inability to bounce back has intensified fears of a new crypto winter.

But Matt Hougan, chief investment officer at Bitwise, believes decentralized finance could play a central role in leading the market out of the current bear phase, as investors increasingly focus on fundamentals such as actual users, revenue and sustainable value.

Aave in the Center

In a recent post, Hougan talked about a governance proposal released by Aave Labs, the team behind the Aave lending protocol, titled “Aave Will Win,” as an example of why DeFi could enter a new phase. According to Hougan, DeFi protocols like Uniswap and Aave are already operating as serious businesses. Uniswap handles more spot trading volume than Coinbase at times, while Aave generates over $100 million in revenue annually.

Despite this, DeFi-related tokens have underperformed, largely because most were designed as governance tokens offering voting rights but no direct rights to protocol revenue. Hougan explained that this structure emerged as a defensive response to regulatory pressures, particularly from the U.S. Securities and Exchange Commission (SEC), which used the Howey test to assess whether the tokens could be classified as securities.

The Bitwise exec noted that Aave attempted to address this issue through its “Aavenomics” upgrades in 2024 and 2025, which introduced token buybacks funded by protocol fees. But tensions persisted because Aave Labs could still allocate some of its revenue to itself, a point that gained attention in December 2025 when it allocated $10 million in swap fees to the company.

The new “Aave Will Win” proposition aims to address this issue by committing Aave Labs to funnel 100% of revenue from all Aave-branded products, including its website, mobile app, card, and institutional services, directly to the DAO treasury controlled by token holders. In return, Aave Labs would receive a funding package consisting of stablecoins, Aave tokens and milestone grants of approximately $50 million to cover the development of Aave V4 and the transfer of intellectual property to the community, while a new foundation would own the Aave brand and trademarks.

This would effectively transform the Aave token from a purely governance role to an asset with a direct right to revenue, while positioning the founding team as a responsible service provider to token holders, Hougan said.

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Pushback

The proposal has drawn criticism from some community members who view the funding request as excessive or argue that certain elements are lumped together. Others also point to unresolved questions about how revenue will be defined and controlled.

While calling these concerns “legitimate,” Hougan said Aave’s move could lead to the adoption of other assets.