AAVE Slides as Governance Fight Boils Over

Hi! In today’s edition:

• 🧩 AAVE falls as governance tensions flare between DAO and Aave Labs

• 📊 Crypto.com plans in-house market maker for prediction markets

• 🔧 Gnosis hard forks to recover $9.4 million from Balancer exploit

• 🏗️ Former FTX US president raises $35 million for AX exchange

• 🔐 How crypto users get rekt and how to stay safe

• 🎙️ Bits + Bips debates whether crypto can recover or faces another washout

🧑‍🎄 One quick note: Unchained Daily will be taking a short holiday break and will not publish starting tomorrow, Christmas Day. We’ll be back on Monday, Jan. 5 with all the most important developments across the crypto ecosystem.

Before we go, we just want to thank you for being with us every day. 

We hope you have a wonderful holiday, however you choose to spend it.

– The Unchained Team

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AAVE Declines as Governance Fight Escalates

AAVE, the native token of decentralized lending protocol Aave, has fallen 20% in a week as tensions rise between token holders and Aave Labs.

After a proposal for transferring brand assets from Aave Labs to a DAO-controlled entity was rushed to a snapshot vote, more than 58% of votes were against it passing, while an overwhelming 37% of voters chose to abstain.

The top three “nay” voters represented the majority of tokens used to vote. Onchain data shows that Aave founder Stani Kulechov bought $5 million in AAVE tokens this week.

“Labs clearly not acting in good faith - cheeky vote like this w/ no comms to holders is empirical proof,” wrote one user who voted to abstain.

According to MoonRock Capital Partner Simon Dedic, both sides are wrong. In his view, all protocol value should flow through to token holders, but Aave Labs should keep control of brand assets to effectively build the protocol.

“The DAO taking over Aave would likely be the worst possible outcome - not just for Aave, but for DeFi as a whole,” he said.

Crypto.com to Hire In-House Market Maker for Prediction Markets

Crypto exchange Crypto.com plans to launch an internal market‑making team for its prediction markets offering, according to a job posting from the firm.

The role seeks a “quant trader” who will trade financial contracts based on the outcome of sports games. 

A Crypto.com spokesperson told Bloomberg that the firm does not “rely on proprietary trading as a source of revenue,” and that its internal market maker “does not have access to proprietary data or customer order flow” before other participants.

Prediction market firms Kalshi and Polymarket also face similar criticism on potential conflicts of interest, given both firms use the services of professional market makers to facilitate trading on their platforms.

“Speaks to the liquidity problem. No other choice but to build internally,” commented Aaron Riccio, founder of prediction markets firm Sports Capital.

Gnosis Completes Hard Fork to Recover Balancer Exploit Funds

The Gnosis Chain executed a hard fork earlier this week to recover around $9.4 million in funds frozen after the November Balancer exploit.

Operators activated the fork at 11:11 am ET on Dec. 22 following governance approval, revoking hacker control and enabling fund return to users by Christmas.

Validators face penalties like suspended rewards or slashing for not upgrading nodes within ten days.

The move, only announced by the Gnosis team early Tuesday morning, sparked debate on blockchain immutability versus user protection.

Critics like pseudonymous DeFi analyst Ignas saying the hard-fork would set precedents for other chains to follow.

“Anyone who criticizes this is wrong. Taking a stand and fighting back is the right thing to do,” said prominent Ethereum builder Joseph Schiarizzi on X.

Former FTX US Chief Raises $35 Million for New Exchange: Report

Brett Harrison, former president of FTX US, has raised $35 million to launch AX, a Bermuda-regulated exchange offering perpetual futures on traditional assets like stocks and forex, according to a report from The Information.

The funding round, led by Miami International Holdings and Tioga Capital, values Harrison’s startup “Architect Financial Technologies” at around $187 million. It follows a prior $12 million round in 2024 from backers like Coinbase Ventures.

The platform applies crypto-inspired trading mechanics like non-expiring contracts without asset custody, to target non-U.S. institutional investors amid U.S. regulatory restrictions.

Harrison served as president of FTX US for roughly 17 months before resigning in 2022, shortly before the collapse of FTX.

How Crypto Users Get Rekt and How You Can Stay Safe

Security continues to be a major pain point for crypto. Experts discuss how the landscape has evolved and why a security plan may not be enough.

Security remains work in progress for crypto — and that may be putting it mildly. This year Bybit was hacked for $1.5 billion, the largest exploit ever, crypto or otherwise.

In this Unchained episode, Security Alliance members explain how crypto exploits have evolved, why smart contracts are no longer the primary vulnerability and why a security plan alone may not be enough.

They take us inside how North Koreans are getting jobs at crypto and tech companies and how they operate.

Plus, best practices for individuals that intend to hold their assets for the long-term. Test transactions and 2FA based on authenticator apps may not be ideal.

Listen to the episode on Apple Podcasts, Spotify, Pods, Fountain, Podcast Addict, Pocket Casts, Amazon Music, or on your favorite podcast platform.

Bits + Bips: Will Crypto Rise on Liquidity or Will 2026 See Another Washout?

From token oversupply to M&A and institutional rails, the crew asks what has to break before crypto can really recover.

After a “weird” year in the markets, hosts Ram Ahluwalia and Christopher Perkins are joined by Ava Labs’ President John Wu for a candid debate about where crypto really is in the cycle—and what needs to happen next.

The panel wrestles with a question many investors are quietly asking: has the market washed out enough to set up the next move, or is something still missing? They explore why momentum has faded, what signs would suggest it’s coming back, and why 2026 keeps coming up in long-term conversations—even as near-term enthusiasm remains divided.

Plus, why TGEs are “dying” and, with the rise of super apps, does Coinbase have an edge on Web2 players like Robinhood?

Listen to the episode on Apple Podcasts, Spotify, Pods, Fountain, Podcast Addict, Pocket Casts, Amazon Music, or on your favorite podcast platform.

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• 🕵️‍♂️💸 A vast Chinese-language crypto black market on Telegram has grown into the largest illegal online crypto network ever, moving nearly $2 billion per month through scams and money laundering and surpassing past dark-web giants like AlphaBay and Hydra.

• ⚠️ Polymarket users lost funds after attackers exploited a flaw in an external login service, with the breach now closed and reports indicating most affected accounts were created through a third-party authentication provider.

• 🇯🇵🚪 Bybit will phase out services for Japanese residents starting in 2026, choosing to withdraw from Japan after years of regulatory pressure that already forced Apple and Google to remove its app, with affected users facing gradual account restrictions and extra checks if misclassified.

• 🛡️ Bybit will roll out a redesigned insurance fund to better handle sharp market swings, first routing new USDT futures into a dedicated $8 million buffer before pooling risk more broadly, more than tripling loss protection per trading pair.

• 🇷🇺 Russia’s central bank is preparing rules to reopen domestic crypto trading under strict controls, limiting everyday investors to small yearly purchases after a knowledge test while allowing qualified investors to trade freely except in anonymous tokens.

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