Aave Labs has proposed redirecting 100% of product revenue to the Aave DAO and moving its intellectual property to a new foundation, while requesting substantial funding in return, sparking fresh debate over control of the DeFi giant.
Aave Governance Clash Escalates With New Proposal
Aave Labs has unveiled a sweeping proposal that would fundamentally reshape the governance and economics of the Aave ecosystem.
The research and development firm has proposed to send 100% of revenue from Aave-branded products, including swap fees from Aave v3 and the upcoming v4, frontend earnings from aave.com, and future initiatives such as the Aave Card and a potential AAVE ETF, directly to the Aave DAO treasury.
The plan, dubbed the “Aave Will Win Framework,” also calls for transferring trademarks and intellectual property to a newly created Aave Foundation, effectively positioning token holders as the primary beneficiaries of the multi-billion-dollar DeFi protocol.
The move follows months of tension between Aave Labs and the DAO over ownership and revenue rights. Last December, controversy erupted after Labs redirected swap fees from the official frontend to a company-controlled wallet. A governance attempt to seize Labs’ IP ultimately failed, but negotiations continued.
Central to the new framework is Aave v4, a long-awaited upgrade designed to unlock new revenue streams, allowing the protocol to expand into new markets with custom risk parameters. Aave v3 currently generates over $100 million in annualized revenue. Labs proposes gradually winding down v3 within 8–12 months after v4’s launch.
In exchange for surrendering revenue, Aave Labs is requesting funding from the DAO: $25 million in stablecoins, 75,000 AAVE tokens vested over two years, and additional grants totaling $17.5 million to support product launches, including Aave App, Aave Pro, Aave Card, and Aave Kit.
Critics, including Aave Chan Initiative founder Marc Zeller, argue the proposal amounts to a $50 million extraction disguised as decentralization. Zeller questioned the governance process, suggesting the company is attempting to dictate outcomes without sufficient consultation.
The debate now centers on whether the proposal represents a bold decentralization milestone or a high-stakes power shift in DeFi’s largest lending protocol.
FAQ🏛️
- What is Aave Labs proposing?
To send 100% of product revenue to the Aave DAO treasury. - What happens to Aave’s IP?
The proposal includes a plan to move Aave’s IP to a new Aave Foundation. - How much funding is Labs requesting?
Up to $50 million in stablecoins, AAVE tokens, and grants. - Why is this controversial?
Some DAO members see it as a cash-out attempt.