Unchained Podcast Episode 993

The Chopping Block: Aave Civil War + Flow Hack + Coinbase Super-App

Host: Laura Shin
Panel: Haseeb Qureshi, Tarun Chitra, Tom Schmidt
Date: January 1, 2026

Main Theme

This episode of “The Chopping Block” dives deep into three headline stories from the crypto ecosystem:

1. The “Aave Civil War,” an ongoing governance clash between the AAVE DAO and AAVE Labs regarding IP, brand, and protocol control.
2. The Flow blockchain hack and the attempted chain rollback, sparking debate about blockchain sovereignty, forkability, and the perils of chain interconnectivity.
3. The sweeping new product launch from Coinbase, which aspires to be the “Super-App” of crypto and beyond—offering stocks, tokenization, prediction markets, and more.

1. The Aave Civil War: DAO vs. DevCo

Segment Start: [01:23]

Background

• AAVE is the largest on-chain lending protocol. Its governance and resources are split between the AAVE DAO (a decentralized organization) and AAVE Labs (a company founded by Stani Kulechov, recently rebranded as Avara).
• The DAO manages the smart contracts, risk, and treasury, but AAVE Labs controls the frontend (aave.com), brand, IP, and much of the core infrastructure.
• Historically peaceful, the relationship soured after front-end changes routed swap fees (approx. $10 million/year) from Cowswap not to the DAO, but to AAVE Labs. This led to accusations of “stealth privatization.”

Key Developments

• Major DAO members, especially Mark Zeller (the “protectorate of the DAO ecosystem”), labeled the fee capture by Labs as a betrayal and called for “seizing” AAVE-related IP and brand assets (“poison pill proposal”).
• A controversial snapshot vote was held on Dec 25 (Christmas), resulting in:
  • Nays (keep the status quo): 55%
  • Abstain (objecting to the process): 41%
  • Yeas (seize assets): very small
• Many saw the timing as an attempt to suppress genuine debate; indications are a more robust proposal and re-vote will follow.

Panel Insights & Debate

Long-Standing Tension

• Tarun: “This animus goes back a lot longer than just, hey, we want the IP now… It was brewing for a while.” [07:01]
• Friction between DAO service providers (like BGD) and AAVE Labs/Avara has been an undercurrent for years (not just recent swap fee drama).

Structural Oddities

• Haseeb: “It’s uniquely because it is aave.com and that is where everybody goes… The DAO has no claim over the IP. The DAO does not own the name AAVE. AAVE Labs owns the name…” [14:51]
• AAVE’s legal/structural setup is a vestige of pre-foundation/ICO era, unlike most modern DAOs with not-for-profit foundations subordinate to DAO votes.

Legal & Governance Uncertainty

• Tarun references lawyer Gabriel Shapiro: “He has some interesting points about the idea of, like, no one has really challenged a lot of this stuff, and it’s not totally clear what happens.” [11:39]
• Actual on-chain governance may not map well to off-chain IP rights; legal recourse for the DAO may be minimal.

Fairness vs. Economics

• Tom: “People want this to be isomorphic to the Uniswap situation when I just don’t think it is at all… They’re not selling AAVE merch.” [20:04]
• Tarun: “There’s this feeling of fairness that seems to be what people care about, which is very different from who’s… the money comes in, how does it get split.” [20:20]

Notable Quote

“Maybe the best argument here among all of this is not that like, hey, AAVE Lab should get punished or AAVE Dao should get punished or whatever. The best argument here is that like we need better disclosures… Information is the solve...”
— Haseeb [18:52]

Broader Cultural Divide

• Tarun: “I was comparing a lot of the Chinese language… tweets to the English tweets... people in Asia were more angry about this issue than people in the west...” [25:47]
• Belief that OGs and cultural backgrounds (e.g., Confucian values around responsibility and stewardship) influence perspectives in the DAO conflict.

Prognosis & Next Steps

• Expect another more deliberate proposal and vote.
• Haseeb: “The leverage the DAO has is not obviously legal recourse… it’s headaches and yelling and fighting and… the DAO token going down… People vote with their wallets.” [25:11–25:34]

2. Flow Blockchain Hack & The Chain Rollback Fiasco

Segment Start: [28:07]

What Happened

• Flow blockchain (by Dapper Labs) was exploited for $3.9 million via a bug allowing the minting of new FLOW tokens.
• The response: Flow paused the blockchain and proposed a rollback to pre-attack state—unprecedented as the hacker had already bridged and sold stolen tokens.

Problems with the Rollback Proposal

• No consultation with bridges/exchanges; bridges would suffer as users who bridged-in after the exploit would see their funds invalidated.
• Backlash on Twitter led Flow to abandon the full rollback in favor of a more measured approach (gradual remediation).

Technical & Governance Implications

Blockchain Interconnectivity

• Tarun: “Bridges become custodians during forks because they kind of own this liability of the mismatch between these chains…” [31:16]
• Classic L1 sovereignty/forkability and L2 forced-inclusion assumptions break down when assets are bridged across chains.

Chain Survival & “Carrying Capacity”

• Haseeb: “The fixed costs of all the infra you need is probably on the order of about $20 million… Layer 1s have become more expensive over time and that probably argues to room for [consolidation].” [39:37]
• Tarun: “Is there a sense in which there’s like a carrying capacity for chains?... Chains will die because they can’t convince the bridges to hold the custodial risk.” [36:32]

Metaphor

“You die two deaths. One death is when Coinbase delists you, the last death is when the last bridge disconnects from you—then you’re really just floating in the ether.”
— Haseeb [41:24]

Attackers & Exploits

• Tarun notes modern exploit discovery is AI-assisted—easier than ever to find bugs, especially on less maintained chains. [41:54]

Notable Moment

• Christmas exploit history: “Christmas is a classic time for exploits.” [41:49]

3. Coinbase's Super-App Ambition

Segment Start: [43:23]

Product Announcements

• Mainstream equities and ETFs trading (0-commission, 24/5 trading).
• Tokenization platform for stocks (“Coinbase Tokenize”), entering competition with Securitize.
• Prediction markets via Kalshi integration.
• Futures and perps (international app only).
• Solana DEX trading via Jupiter integration.
• Coinbase Business app (all-in-one payments for SMBs).
• Coinbase Advisor (AI-powered investment guidance).
• Global rollout of the Base app.
• Various payment and stablecoin improvements.

Panel Analysis

Competitive Dynamics

• Tom: “They’re probably receiving a lot of pressure from Robinhood and these other… players that are trying to get aggressively into crypto…” [44:49]
• Robinhood’s success with crypto cross-selling is a probable catalyst.

The “Everything App” – Plausibility & Pitfalls

• Haseeb: “Whoever’s trading stocks on Coinbase has got to be the juiciest flow in all of mankind, right?… That is valuable in and of itself.” [50:20]
• Tom: “I think it’s going to be tough honestly. I think just like the overall TAM for people who want to trade stocks is much, much larger… You’re starting with a smaller funnel.” [46:02]

TAM Expansion: Is There a Real Opportunity?

• Tom: “People where a crypto exchange is their first form of financial services… maybe people who are international… this exchange is sort of becoming my bank…” [52:08]
• Tarun & Haseeb: The neobank-to-tokenized-stocks path might be most fertile (rather than serving mainstream US stock traders).

Product & Org Structure Observations

• Tarun: “Coinbase and Robinhood have very different philosophies… Robinhood is asset-light, outsources, focuses on UX; Coinbase is vertical, builds most infra itself.” [57:40]
• Haseeb: Organization culture analogy—Coinbase as engineering-driven, Robinhood as product-driven. “Who’s dominant shapes decisions downstream.” [59:08]

User Preferences – Keep “the food separate”

• Haseeb: “People mostly like to keep the food separate on their plate… I kind of want to put my crypto in my separate crypto app.” [54:28]
• Tom: Robinhood is perhaps the counterexample, but for most, cross-selling is tricky without a native user fit.

Notable Quotes

• “I just am not sure if any of these things are like net new users… It’s not so clear to me. There’s like a lot of things and some of them in theory could be new users, but it’s not obvious.”
  — Tarun [56:41]
• “The stablecoin depositors I think is the strongest version of the story… Now we have you locked in for your financial portfolio here.”
  — Haseeb [57:09]

Memorable Moments & Quotes

• Panelist humor on DAO drama:
  “You can’t do a Chopping Block episode without covering DAO drama. What do people want, Evergreen?” — Haseeb [28:07]
• On holiday exploits:
  “Attacking on Christmas is pretty dastardly. That’s Grinch level behavior.” — Tarun [42:36]
• On historical context:
  “These are people who I probably followed in 2017 or 2016 or 2015… and a lot of them were writing diatribes about how the DAO should really own the IP…” — Tarun [25:47]
• On Coinbase’s engineering DNA:
  “Coinbase is more engineering driven… because Brian [Armstrong] was an engineer and that flows downstream...” — Haseeb [59:08]

Timestamps for Major Segments

• [01:23] — AAVE Civil War overview and breakdown
• [06:47] — Underlying DAO vs. DevCo tensions
• [11:38] — Legal/IP questions & historical context
• [28:07] — Flow Hack and chain rollback discussion
• [31:16] — Bridges, forks, and chain viability
• [43:23] — Coinbase Super-App launch analysis
• [50:20] — Cross-selling userbase and "juicy flow" debate
• [54:28] — User preferences for app segmentation

Overall Takeaways

• The AAVE governance conflict isn’t just about one swap fee integration; it’s a longstanding struggle about who “owns” protocol value, with deeper cultural and structural underpinnings.
• The Flow hack highlights the complexity (and sometimes futility) of L1 chain sovereignty in an interconnected blockchain economy—where bridge risk can upend assumptions about isolation.
• Coinbase is doubling down on product breadth to stave off rivals, but whether the “Super-App” model brings real user growth or just more cross-sells remains an open question.

For listeners:
This episode is a must for those interested in DAO governance, crypto’s evolving legal frameworks, DeFi’s future, and product strategy at major crypto companies. The unsparing, witty banter and inside-baseball observations will please both builders and crypto observers.