Aave Labs has taken a bold step this week, bringing forth a governance proposal known as the “Aave Will Win” plan, which aims to channel 100% of product revenue directly into the DAO treasury. This ambitious framework represents a pivotal moment for the decentralized lending protocol, raising the stakes significantly with a request for $50 million in operational funding.
The proposal outlines a funding request that includes $25 million in stablecoins and 75,000 AAVE tokens to be disbursed upfront, alongside an additional $17.5 million earmarked for specific product launches to ensure the smooth running of operations that Aave Labs has largely funded independently until now.
One of the key features of the proposal is the assertion that all revenue from Aave-branded products, including swap fees and newly planned offerings such as Aave Card, would funnel into the DAO treasury. Aave Labs founder Stani Kulechov asserts that this strategy positions the protocol for growth in a market increasingly moved by fintech companies and institutional players venturing into decentralized finance (DeFi).
Following the announcement, the AAVE token saw a modest gain of about 2%, a notable rise amid a broader market downturn. However, the proposal hasn’t gone off without a hitch. Prominent DAO member Marc Zeller has publicly criticized the initiative, calling it a veiled attempt to extract $50 million under the guise of a beneficial funding model. He has voiced concerns about the perceived lack of prior engagement with the DAO community before rolling out such a sweeping plan.
Brand Control Tensions Resurface
This latest proposal comes on the heels of heightened tensions surrounding the control of Aave’s brand and associated assets. In December, Aave Labs redirected swap fees away from the DAO treasury to a company-operated wallet, igniting community backlash and a failed hostile takeover attempt aimed at seizing Aave Labs’ intellectual property and brand assets during a holiday governance vote. This episode has fueled ongoing discussions about revenue sharing and brand governance.
The community remains divided over whether the DAO or Aave Labs should hold primary control over the brand’s trademarks and social accounts. Critics argue that concentrating power within Aave Labs undermines the foundational principles of decentralization and question the amount of control founding teams should retain as protocols evolve towards decentralized autonomy.
Aave is already recognized as one of the largest decentralized lending protocols globally, empowering users to lend and borrow digital assets without the need for traditional banking systems. Aave v3 is currently generating over $100 million annually, which underscores its significant role in the DeFi landscape.
Aave V4: The Future of Expansion
At the heart of the proposal is the planned Aave V4 upgrade, designed to facilitate easier market entry and the launch of new financial products. The upgrade proposes a hub-and-spoke model that supports broader market expansion with tailored risk management structures. Unlike the previous versions, V4 offers a more agile approach that allows for rapid changes without extensive overhauls of the core system.
Aave Labs is also seeking operational autonomy, arguing that swift decision-making is vital to stay competitive amidst other well-funded DeFi players. The proposed funding structure entails $5 million upfront, with $20 million streamed over the course of a year, and additional grants set for the deployment of initiatives like Aave App, Aave Pro, and Aave Card.
The overarching plan has acknowledged that this funding request surpasses historical norms, as Aave Labs had largely self-funded its operational costs in the past. Annual budgets will now require separate governance approvals to foster transparency and accountability concerning funding allocations.
As the proposal unfolds, Aave Labs looks to establish a new Aave Foundation to manage trademarks and intellectual property, addressing concerns about the DAO’s capacity to own intellectual property directly under existing laws. This new foundation aims to navigate the evolving governance landscape as both Aave Labs and the DAO chart their future paths.
The community remains at a crossroads, pondering not only the immediate implications of this funding strategy but also the long-term governance framework that must evolve as Aave continues to redefine its identity within the DeFi space.
