AAVE just killed Decentralization. 2026 Outlook.

My previous post, “Altcoin Season Is Canceled” got 240K views. Clearly, many people are wondering what is happening with altcoins and what their future looks like.

Most commentators debated whether we actually had an altcoin season at all. One user, u/MaximumStudent1839, identified my pain point and argued that the whole "ownership", "equity", and "cash flow" was misleading and "brain hemorrhage". His view was simple: tokens should be treated as store-of-value assets driven purely by consensus. No future cash flows, no fee growth, no usage-based valuation. Just owning tokens based on their role and necessity within a given blockchain. Bullish on network-effect assets and bearish on some DeFi tokens, "ICM" tokens, etc.

In that framing, crypto is not a security, registered or unregistered. It is a collectible, sometimes with utility tied to an adjacent protocol.

While I was responding to comments, Stani, the founder of Aave landing protocol, was effectively demonstrating how this theory plays out in practice.

I made a video braking down how AAVE DAO debacle unfolded https://youtu.be/NLDFTqavmNA and how Gary Gensler might have been right.

The moment the SEC dropped its investigation early Dec '25, Aave Labs switched the swap provider on its frontend and redirected fees away from the DAO. The amount is not huge - $10m, roughly one ninth of total Aave fees. Still, the principle matters. AAVE token holders do not benefit if fees accrue anywhere outside the DAO treasury.

This raised a key question. Should the DAO control all Aave IP and all fees generated by its storefront? Some may think this is not very important, but what if storefront fees eventually exceed protocol fees? AAVE holders should care where value is created and where it flows.

The vote happened, and Stani voted against the initiative, carrying about 33% of the voting power. Days before the vote, he spent roughly $12M buying AAVE. Good for price, bad for decentralization. Other large holders abstained. And realistically, why would they vote against the founder? He is responsible for their gains and has the most skin in the game.

Now consider the real risk. What if tomorrow there is a decision to funnel protocol fees to another wallet and cut off the DAO entirely? Would the minority be able to unite and vote against it?

DAOs are a compelling idea, but in practice the founding team has the final say. If they decide to sell the labs, as we saw with Axelar, Padre, and Tensor, token holders have no real way to intervene.

So you can throw most of the decentralization and governance narrative out the window. It does not work in the real world. Like communism, it sounds good on paper. When trying to make everyone equal - someone will always be more equal than others.

To be precise, it does work, just not the way it is advertised. DAOs simplify corporate governance, make it transparent, and put voting onchain. But they only cover the technical layer of governance, not ownership or control.

At the end of the day, crypto tokens function like unregistered securities. The best outcome we can realistically hope for is that the current SEC administration under Paul Atkins carves out a niche with more relaxed rules for digital securities.

That would simplify development and further integrate TradFi. At the same time, it would likely compress valuations, as criminal and scam capital would be forced out toward privacy chains that even most DEXs do not support.

Forget about altcoin season. Forget about “the next cycle.” Pumps will still happen, but only for a select few, mostly new tokens with the right timing, the right narrative, heavy marketing budgets, and VC or cabal bundling. Do not hold, and definitely do not DCA into any project tokens.

2024–25 taught me that, in the long run, capital preservation matters more than capital growth. In 2026, I’m bullish on L1/L2 ecosystems and platform tokens with strong network effects, and bearish on most project coins.

Merry Christmas and Happy New Year.