Aave Labs has proposed directing 100% of product revenue to the Aave DAO treasury. The initiative appears to be an attempt to resolve a recent conflict between the profit-oriented R&D company and the community-governed DAO, as well as to set a new growth trajectory for the largest decentralized lending protocol.
On Thursday, the team put forward a non-binding “temperature check” for discussion. Aave Labs wants to understand whether the DAO will support a new concept called the Aave Will Win Framework. Judging by the wording, it returns token holders to the status of main beneficiaries of the protocol.
According to the proposal, all revenue from products under the Aave brand should go to the DAO treasury. This includes swap fees in Aave v3 and the upcoming v4, revenue from the aave.com frontend, as well as new business lines including Aave Card and a potential AAVE-ETF.
In addition, it is proposed to create a new structure called the Aave Foundation, which will own the project’s trademarks and intellectual property.
If the initiative is approved, it will significantly change the ownership model of the Aave brand and become a large-scale experiment in DAO governance for a project with a multi-billion dollar capitalization. However, the proposal has already drawn criticism. Formally, Aave Labs is giving up its revenue model, but the question is whether the company is truly losing its position.
The founder of the Aave Chan Initiative and influential DAO participant Marc Zeller responded sharply.
“I want to immediately stop any gaslighting attempts. We’ve seen this scenario before: first, deliberately harsh conditions are rolled out, then negative feedback is gathered, after which a scaled-back version of the demands is presented as a reasonable compromise, while still extracting huge benefits from the system,” he wrote.
How the Conflict Began
The proposal emerged amid months of debate within the Aave community about who actually owns the project. The DAO, which has effectively overseen the development of the lending protocol since the launch of the governance token, or Aave Labs, the startup that originally created the brand.
In December of last year, Aave Labs sparked a wave of discontent when it redirected swap fees from the official aave.com interface. Previously, these funds went to the Aave DAO treasury, but the company transferred them to its own wallet.
In response, one token holder proposed a so-called poison pill strategy. The idea was to try to gain control over Aave Labs intellectual property, codebase, brand, and even a stake in the company, effectively turning it into a DAO subsidiary. The initiative was put to a vote, but did not gain support during the holiday period.
See also: The Fed Proposes Classifying Crypto Assets Separately for Margin Calculation
Nevertheless, this episode apparently prompted Aave Labs CEO Stani Kulechov to negotiate a new model for revenue and brand rights distribution.
It is worth noting that all this is happening amid a major restructuring at Aave Labs. The company has already closed or wound down web3 directions not directly related to lending, which previously operated under the Avara brand. The Lens social protocol was sold, and the Family wallet is gradually being phased out. The startup is now focusing on DeFi.
Aave V4
A key part of the Aave Will Win Framework concept will be the launch of Aave v4. The updated version of the protocol has been in development for several years. Aave Labs emphasizes that the V4 architecture opens up revenue streams that were difficult to implement in previous versions. It is assumed that these proceeds will also go to the DAO treasury.
Among the innovations is the hub-and-spoke model. It will allow the launch of separate markets or use cases with their own risk parameters and revenue models. Essentially, this is about expanding the protocol’s business lines. For comparison, Aave V3 already generates more than $100 million in annual revenue.
As part of the proposal, Aave Labs suggests coordinating the development of V4 together with the DAO, while gradually deprioritizing new feature development for V3.
See also: The Web3 Market Reaches $64 Billion, but Centralized Logins Have Become a Weak Point
During the temperature check, the team also floated the idea of gradually winding down V3 within 8-12 months after the launch of V4. Parameters will be adjusted to encourage users to migrate to the new protocol version.
Aave Labs added that a separate proposal on V4 activation, launch, and technical details will be presented later.
Funding or Redistribution?
Aave Labs declares its readiness to give up all revenue and transfer branded assets to the DAO. In return, the company asks to approve a model for funding its operating expenses. This involves $25 million in stablecoins, 75,000 AAVE, and additional grants for launching specific products.
The request structure is as follows. $5 million is paid immediately, another $20 million is distributed over a year. 75,000 AAVE is to be unlocked evenly each month over two years.
In addition, Labs is requesting three grants of $5 million each for the development and marketing of Aave App, Aave Pro, and Aave Card. Separately, $2.5 million is proposed for the development of Aave Kit.
Although the company is formally moving from a self-funding model to support from the DAO, the document emphasizes that the requested budget significantly exceeds historical funding levels.
The initiative text states that previously, Aave Labs mainly covered product layer development costs itself, turning to the DAO only for protocol core and targeted marketing issues. The new plan is intended to provide the investment needed to maintain competitiveness and innovation in the coming years.
See also: Polymarket Adds Five-Minute Bitcoin Forecasts
It is also noted that funding will depend on confirmed results. The budget for each year must be submitted for a separate vote, giving the DAO ongoing control over fund allocation.
Under the new model, the DAO effectively takes on funding for a broader operational scope, including product development, go-to-market strategy, legal support, compliance, and business development. At the same time, Aave Labs notes that it previously subsidized many of these areas itself.
The discussion is just beginning, but Marc Zeller has already described the initiative as an attempt to extract about $50 million from the ecosystem without prior agreement with the DAO.
“Let’s honestly look at the situation. Labs is acting as if it can impose a decision regardless of the governance process. If token holders are fine with that, it’s their right, but I’m not going to pretend this is a healthy governance model,” he wrote.
