Aave Proposes Establishing a Foundation to Transfer Brand and IP to the DAO

Author: Aave Labs

Compiled by Deep潮 TechFlow

Deep潮 Summary: Aave DAO has spent years paying service providers to write code, build tools, and develop branding—but the trademarks and core domain names are still not held by the DAO, leaving it without standing to enforce its rights. This proposal addresses the challenge of “assets having an owner, yet no one above the DAO” by utilizing a memberless foundation company incorporated in the Cayman Islands, serving as a model for DeFi governance evolving into mature asset management.

This ARFC proposal aims to establish the Aave Foundation, a memberless foundation company registered in the Cayman Islands, to hold the Aave trademark and related intellectual property on behalf of the Aave protocol.

Establishing a legal entity is the first step in a multi-phase process. This proposal covers only Phase One, including company registration and the appointment of the initial independent director and independent supervisor. Subsequent phases will be submitted for governance review separately, each addressing the transfer of intellectual property rights such as trademarks, domain names, and code repositories, as well as operational scope.

This proposal stems from the commitment of the "Aave Wins" framework to incorporate community guardianship of the brand and intellectual property into governance, further solidifying AAVE’s position as the sole core asset within the Aave ecosystem.

The first phase only includes reasonable registration fees, legal fees, and fees for the appointment of directors, supervisors, and secretaries. The remainder of this document addresses the structure, scope, and limitations imposed on this structure.

Over the years, Aave Governance has funded multiple service providers, resulting in code, risk tools, models, and documentation. Ownership of these outputs has been inconsistently handled across different partnerships, with some cases retaining ownership with the original development service providers. Additionally, the Aave trademark and primary domain names are currently outside the control of the DAO. The DAO cannot register trademarks, file infringement lawsuits, or hold domain ownership, resulting in the practical reality that assets paid for by the DAO cannot be adequately protected by it.

A Cayman Foundation Company can resolve this issue because it can hold ownership, enter into contracts, and appear in court, while maintaining a memberless structure that prevents any member from exercising rights over it. DeFi foundations have come under scrutiny due to their long-term accumulation of discretionary power, often because they rely on annual treasury grants for operations and are managed by the same team that originally proposed their establishment. The following design eliminates both of these conditions.

Establishing a legal entity, transferring registered trademarks across different jurisdictions, and negotiating transfer terms with existing agreements each involve separate legal work and costs. Phasing the process allows each request to be clearly defined and scoped to work that the community can evaluate, with review conducted before proceeding to the next phase. The DAO can halt the process at any stage, and the foundation will remain a fully operational and clearly governed entity.

1. Legal structure

The Aave Foundation is registered as a memberless foundation company in the Cayman Islands under the Foundation Companies Act, with its objects limited exclusively to holding, protecting, and licensing intellectual property for the benefit of the Aave protocol. The Foundation is managed by independent directors and supervised by independent overseers who have no affiliation with the directors. After the initial appointments, the appointment and removal of directors are determined solely through AIPs.

Aave Labs, any service providers hired by the DAO, and any of their affiliates shall not have the right to appoint directors or supervisors, nor shall they be appointed to either of these positions.

2. What does the foundation hold?

The foundation will obtain legal ownership of the Aave trademark, the intellectual property rights to the protocol codebase, the primary domain, and the intellectual property rights transferred to it under the service provider agreement. As the owner, it is responsible for applying for, maintaining, defending, and enforcing these assets.

Brand licensing is one-way. The foundation grants back the Aave name for product development, enabling Aave-branded products to continue being delivered, and this license is provided at no cost.

The DAO continues to select service providers, define their scope, and approve their compensation through existing governance mechanisms. The resulting code, tools, models, and documentation are transferred to the Foundation as a standard condition of these collaborations, providing a single, persistent owner for the technical outcomes accumulated by the DAO, while the Foundation retains no say in what is built or by whom.

The DAO covers reasonable registration fees, qualified secretary onboarding fees, legal fees, and costs related to the trademark and intellectual property transfer mechanism.

Without applying for a recurring budget, any future funding requirements must be submitted as separate governance proposals.

3. DAO Powers

All decisions regarding asset listings, parameter changes, budgets, service provider engagements, and framework revisions remain DAO decisions made through existing governance mechanisms.

Through the AIP, the DAO has the authority to appoint and remove directors; holds approval rights over any amendments to the foundation’s charter, any disposition of core intellectual property, and any merger or reorganization; and may direct the foundation to liquidate and transfer its remaining assets to a successor entity.

4. Report

The foundation will publish a quarterly report to the governance forum, detailing assets held and changes in ownership, operating expenses, and any legal actions taken to protect trademarks or code repositories. The first report will be released within 90 days after the end of the first full calendar quarter of operations.

The foundation serves the above-defined purposes, while governance retains full decision-making authority over the protocol, exactly as it does today. Asset listings, parameters, budgets, service provider selections, and framework revisions remain determined by token holders, with the foundation having no voting rights, veto power, or advisory role in any decision.

The foundation has no members or shareholders, and no individual owns it. Its board consists of a single independent director, and the overseer is an independent service provider with no affiliation to the director. Neither Aave Labs nor any DAO service provider holds a seat or has appointment rights.

Each phase of the foundation's development will be returned to the forum as an independent proposal for a separate vote, and the community can veto any of them.

If this ARFC achieves community consensus, the proposal will proceed to a Snapshot vote, followed by authorization through an AIP for reasonable registration, legal, and director appointment fees. Registration will then be completed in the Cayman Islands, and independent directors and supervisors will be appointed.

Once the entity is established and capable of holding ownership, the transfer of intellectual property including trademarks, domain names, and code repositories will commence. The terms of transfer will be incorporated when the new service provider is onboarded or replaced through the standard governance process.

No. The protocol is governed by the DAO through token holder voting. Additionally, Aave Labs holds no board seat in the foundation, does not serve as a supervisor, and has no appointment rights. The foundation is memberless, meaning no shareholders in its charter have authority over the Aave ecosystem; the same restrictions apply to every service provider hired by the DAO.

No changes. Asset listings, parameters, budgets, service provider engagements, and framework revisions remain DAO decisions made through existing processes. The foundation holds asset ownership and has no discretionary authority over protocol decisions.

A foundation company established under the Cayman Islands Foundation Companies Act can exist without members or shareholders while still holding legal ownership, entering into contracts, and appearing in court. This allows the foundation to own and defend trademarks without creating an owner above the DAO.

A DAO may at any time replace directors via an AIP, direct the foundation to liquidate, and determine the use of its remaining assets, including transferring them to a successor entity, provided that in each case, the directors’ fiduciary duties, legal obligations, and applicable laws are respected.

Once the entity is established, the Aave trademarks, primary domain, and protocol codebase IP will be fully transferred. Intellectual property generated in future service provider collaborations will be assigned under the standard terms of these agreements.

This proposal was written by Aave Labs. Aave Labs holds no governance or economic role in the aforementioned foundation and receives no setup grants.

Waive copyright and related rights under Creative Commons Zero (CC0).

I support the goal of establishing a legally independent entity to hold and protect Aave’s trademarks, domains, and protocol IP. However, before committing to the Cayman Islands, I believe the governance layer should compare the proposed structure with a Swiss foundation.

The point is not whether the Cayman Islands is feasible—it is feasible. The question is which jurisdiction is more suitable for a bonafide entity holding Aave’s core assets long-term.

1. Stronger protection of legal purposes

The Swiss foundation has no shareholders or members. Its assets are legally dedicated solely to the purposes set forth in the foundation charter and are subject to independent statutory oversight.

For Aave, the purpose of the foundation can be narrowly defined as holding, protecting, and managing the Aave trademarks, domains, and protocol IP to serve the interests of the Aave ecosystem. The oversight body provides additional legal safeguards to ensure these assets remain dedicated to this purpose, even if someone attempts to hijack the governance system by purchasing tokens on the market.

This is substantially different from relying primarily on privately drafted charter restrictions and designated corporate service providers.

2. AAVE governance can be directly embedded into the structure.

This is possible in both jurisdictions.

Cayman law is sufficiently flexible to grant token holders direct governance rights under the articles, so it is unjustified to criticize Cayman on the grounds that "each DAO vote is merely advisory."

Swiss foundations can also embed AAVE governance into their charter structure. Subject to Swiss mandatory laws, token holders may be granted specific rights on certain matters, such as:

Appointment and removal of the foundation board of directors;

Licensing or transfer of core IP;

Oversight of the foundation board; and

Dissolution and disposition of remaining assets.

Therefore, Switzerland’s advantage does not lie in token holder voting itself, but in combining DAO governance with legal purpose locking and independent oversight.

3. IP commercialization is a key jurisdictional issue.

This is especially important because the foundation was established specifically to hold the IP.

The proposed royalty-free license may initially mean that the Cayman Islands' economic substance requirements do not pose a significant issue. However, this foundation is intended to endure in the long term.

If Aave later commercializes its IP through licensing fees, royalties, or other IP income, the Cayman Islands' economic substance regime may directly apply. Entities engaged in IP business in the Cayman Islands may be required to have genuine local substance in the Cayman Islands, including relevant activities, expenditures, presence, and personnel.

Switzerland has not imposed an economic substance regime similar to the Cayman Islands' on IP commercialization. 250718 Jurisdiction comparison…

Therefore, the selected jurisdiction must apply not only on the day the foundation is established but also to any future decisions by Aave to monetize its IP.

4. Switzerland has a more substantial treaty network.

This also applies to international taxation.

Switzerland has a network of over 100 double taxation agreements, while the Cayman Islands has a significantly more limited comprehensive tax treaty network. 250718 Jurisdiction Comparison…

This may become relevant if the foundation collects royalties or licensing fees from counterparties in different jurisdictions. Under applicable treaties and anti-abuse requirements, treaty benefits may reduce withholding taxes and provide mechanisms to avoid double taxation.

For long-term IP holders, this represents a structural advantage worth considering.

Therefore, I recommend obtaining a brief legal opinion comparing the Cayman Islands and Switzerland prior to incorporation, focusing on:

Integration of AAVE governance;

Legal protection of the foundation's purpose and core IP;

Handling of future IP commercialization and economic substance requirements; and

Application of double taxation agreements to cross-border IP income.

The Cayman Islands may still ultimately be the preferred jurisdiction. However, given that this foundation is intended to hold Aave’s most critical assets long-term, this jurisdictional comparison should be completed prior to the IP transfer, not after.