Introduction

Aave is a decentralized lending and borrowing platform on Ethereum, enabling users to earn interest on crypto deposits and borrow crypto against collateral. Aave offers innovative features like flash loans and the ability to switch between variable and fixed interest rates. AAVE is the platform's governance token, giving holders a say in decision-making.

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Votes

It has been more than 2 years since the community governance on Aave started. The engagement of the voters and the voting power they put into the governance of the protocol have increased, especially since the last quarter of 2022. Also, the majority of the voting has been in favor of the proposals and only a portion of the votes went against the changes proposed.

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Proposals

Throughout more than 160 proposals, only around 13% of which were rejected. While the number of votes per proposal has slightly decreased for recent ones, the voting power (AAVE holdings) put into them has seen an increase.

Conclusion

Overall, it seems that Aave is in a stable position in the DeFi ecosystem of Ethereum, and also, might be a little bit behind the development. There are more than 20 proposals in a queue which will definitely slow down the rate of dramatic changes to the protocol. Besides, the fact that the majority of the proposals are being accepted, shows that most of them are probably being discussed in the community before being proposed. The fact that there were proposals that resulted in a large participation rate and brought a considerable volume of voting powers, shows that if there was an important proposal that decides the direction of the protocol, the community would come and participate. The decline in the participation rate and the voting share power could also be an indication of the slow development of the protocol.

It is worth mentioning that it is best to combine these interpretations with the analysis of the health and performance of the lending protocol on Aave before reaching a final conclusion.

Quorum and Differntial

There are two types of proposals on Aave (more details on the Methodology tab) each has its own set of required vote quorum and vote differential. For the proposal to be passed, it needs to first, have voting powers more than the quorum, and second, have a vote difference more than the required amount in favor of the proposal.

Some proposals met both of these criteria but got rejected in the end. The reason might be because of the Guardian canceling the proposal.

Proposers

There haven't been too many proposers on Aave and the majority of them have only proposed once or twice. There are only two addresses (0x683...26c02 and 0x55b...9f262) with a considerable number of proposals.

Participation

To measure the participation rate for each proposal, the number of voters was divided by the number of holders at the time the voting ended. The result has shown that on average, less than 1% of the holders are participating in the voting. The maximum rate was around 1.7% for proposal number 127.

On the other hand, to measure the voting power share, the total voting power put into each proposal was divided by the total balance of AAVE holders and the maximum supply of 16m AAVE tokens to result in relative (limitations on the Methodology tab) and absolute voting power share, respectively. The data clearly shows that as time goes, fewer amount of AAVE tokens are being used for governance purposes, relatively. The absolute amount has remained almost in the same range over the 2 and a half years of governance on Aave.

Voters

The number of both active and new voters has had a downtrend recently and it seems that only a specific set of wallet addresses are involved in the Aave governance.

Holders

The analysis of AAVE holders (potential voters) at the time each proposal ended compared to the number of voters has demonstrated that although both the number of holders and their average AAVE holdings have been increasing, their voter counterparts have been on a decline after a period of growth.