How Aave Can Help End Crypto Winter, According to Bitwise

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

Even after four months since the biggest drop in the record price above $126,000, the sentiment around Bitcoin remains fragile. Its failure to bounce back has fueled fears of another crypto winter.

But Matt Hougan, Chief Investment Officer at Bitwise, believes that fixed income can play an important role in leading the market out of the current bear phase, as investors focus more on fundamentals such as actual users, revenue, and ongoing value.

Ave at the Center

In a recent post, Hougan cited a governance proposal published by Aave Labs, the team behind the Aave lending protocol, titled “Aave Will Win,” as an example of why DeFi may be entering a new phase. According to Hougan, DeFi protocols such as Uniswap and Aave are already operating as important businesses. Uniswap, at times, handles more trading volume than Coinbase, while Aave generates more than $100 million a year in profit.

Despite this, DeFi-related tokens have not performed well, mainly because most are created as governance tokens that provide voting rights but no direct claim to protocol revenue. Hougan explained that this structure emerged as a defensive response to regulatory pressure, particularly from the US Securities and Exchange Commission (SEC), which used the Howey test to assess whether tokens can be classified as securities.

A Bitwise executive noted that Aave has attempted to address this issue with its development of “Aavenomics” in 2024 and 2025, which introduces the purchase of tokens funded by protocol fees. But the tension continued because Aave Labs could still direct more money to it, a point that drew attention in December 2025 when it allocated $10 million to the company.

The new proposal “Aave Will Win” seeks to solve this by committing Aave Labs to transfer 100% of the 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 will receive a funding package of stablecoins, Aave tokens, and historical grants of up to $50 million to cover the development of Aave V4 and the transfer of intellectual property to the public, while the new foundation will hold the Aave brand and trademarks.

This will effectively change the Aave token from a purely governance role to an asset with a direct claim to revenue, while positioning the founding team as an accountable service provider to token holders, Hougan said.

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Pushback

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

While he considered those concerns “legitimate,” Hougan said Aave’s move could prompt other outfits to follow suit.