Aave DAO Wins, But the Game Is Not Over

Original Title: The DAO Won, but the Deal Isn't Done
Original Author: @Marczeller
Translation: Peggy, BlockBeats

Editor's Note: After the phased landing of regulatory risks, Aave faced a more challenging test at the governance level. On February 13, Aave Labs released a new governance proposal, promising to allocate 100% of Aave's branded product revenue to the DAO and propel V4 to be the protocol's future technical core, seen as a positive response to months of community controversy.

However, a review of the event timeline reveals that the core of the dispute lies not only in a revenue distribution adjustment but in a long-standing tension surrounding revenue ownership, brand ownership, and governance power boundaries. From a trust crisis sparked by front-end product changes to whale sells, founder buybacks, and suspicions of manipulated governance, this conflict has exposed unresolved structural issues between the development team and the DAO.

Related Reading: "Token vs. Equity, the Ins and Outs of the Aave Dispute"

This article attempts to outline how this governance conflict has escalated step by step, examining which key demands the current proposal has responded to and which lingering issues remain unresolved. While Aave's dispute continues, it has already provided a highly realistic governance sample for the entire crypto industry.

Author's Note: The author of this article is the Founder of the Aave Chan Initiative (ACI). ACI is an agent platform for the Aave DAO and also one of the service providers.

Below is the original text:

This proposal, at its core, represents a phased victory for Aave DAO governance.

In December of last year, an independent agent @EzR3aL raised inquiries about revenue ownership, sparking a series of community discussions around revenue alignment mechanisms, governance transparency, and the boundary of Aave Labs' relationship with the protocol. Today, Aave Labs' response includes: routing 100% of Aave's branded product revenue to the DAO treasury, confirming V4 as a unified technical foundation, and establishing a foundation holding the brand and IP.

These changes did not happen naturally but are the result of continued governance pressure. In other words, this is a manifestation of governance in action.

The direction is correct. I have long publicly advocated for this token-centric alignment of interests. The goal is unchanged, but there are still areas in the execution that need clarification and adjustment. Before voting, it is necessary for the community to fully understand the key details.

First, Understand the "Details"

The core statement of the proposal is: "100% of Aave's branded product revenue belongs to the DAO." This is a clear, positive commitment and also demonstrates that decentralized governance can yield real results. However, the premise of governance is a rigorous review of the terms.

The Authority to Define "100% Revenue" Should Not Be in the Hands of Labs

In the proposal text, "revenue" is defined as: total product revenue, minus partner revenue shares, revenue rebates, subsidies, and additional direct user incentives.

The issue is that all the above deductions are unilaterally determined by Aave Labs: no independent audit, no clear cap, and no need for DAO's prior or subsequent approval.

The proposal also states: Aave Labs reserves the right to use some product funds (such as treasury revenue) directly for user incentives.

"100% revenue" is a highly symbolic statement, but the authority to define revenue must be in the hands of the DAO, not unilaterally by the recipient of the funds.
If an independent third-party audit is introduced and a mechanism is set up for DAO approval of discretionary deductions, then this commitment can be transformed from a slogan into an executable, verifiable institutional arrangement.

This is a minor technical adjustment but one of great institutional significance.

Current Treasury Size, Difficult to Withstand Such a Large Lump Sum Payment

As of now, the Aave DAO treasury size is approximately $160.9 million, which decreased by about $44.8 million last month due to market fluctuations. In terms of asset structure, around $100.6 million is non-AAVE assets, and $60.2 million is in AAVE tokens.

This proposal requests: $42.5 million in stablecoins ($25 million main allocation + $17.5 million milestone allocation); 75,000 AAVE tokens

Only the stablecoin portion already accounts for 42% of the DAO's non-AAVE reserves; the total requested amount is approximately $50.7 million, equivalent to 31.5% of the entire treasury size.

This is a highly concentrated funding request aimed at a single service provider, to be completed through a single vote. Until executable constraints and transparent disclosures are in place, no fund or token transfer should occur.

Aave’s Cash Flow Foundation, From V3

Aave V3 currently generates over $100 million in annualized protocol revenue, making it one of the most mature and stable lending infrastructures in DeFi. Looking back, over 95% of Aave DAO's cumulative revenue has come from V3 and its predecessor versions.

However, this proposal positions V3 as being at the "edge of its architecture" and advocates for driving V4 as a holistic replacement at the governance level. Simultaneously, the maintenance plan explicitly states that if this framework is approved, suspending the addition of new features to V3 is reasonable.

While V4 may represent the long-term direction, one must face a fact: currently, it is still in the testnet stage, has only undergone partial audits, and has yet to generate any actual revenue. A more prudent path would be a dual-track approach: while continuing to protect V3 as the $100 million annual cash flow engine, accelerate the independent validation of V4.

Bundling "unlaunched protocols" with "frozen mature revenue sources" in a single vote is evidently too aggressive. The governance confirmation of V4 should be based on its own maturity and mainnet launch status, to be completed through a separate proposal.

Vote Items Should Not Be Forcefully Bundled

The FAQ mentions that splitting relevant items for voting could lead to fragmented plans that are difficult to execute.

However, from a governance perspective, this is a package of four independent decisions: revenue alignment mechanism; governance confirmation of V4; foundation establishment; funding request exceeding $50 million.

Their risk attributes and consensus foundations are not the same.

The community has reached broad consensus on revenue alignment; they may also support the direction of V4 and the foundation; however, significant differences remain regarding funding size, pace, and constraints.

Bundled voting implies "all or nothing" acceptance. If each part stands on its own merits, the community should be allowed to express separate opinions and make separate amendments.

75,000 AAVE Essentially Represents Governance Transfer

At the current price of approximately $109, 75,000 AAVE is worth around $8.2 million, equivalent to 13.6% of the DAO's current AAVE holdings (about 550,000 tokens).

The AAVE token itself represents voting rights.

Previously, I have published on-chain analysis showing wallets associated with Aave Labs infrastructure voting against the "Mandatory Disclosure" proposal (which required wallets to disclose and avoid conflicts of interest). The vote is still ongoing, with the supporting side at a disadvantage.

In this context, the proposal to transfer 75,000 AAVE to an entity with undisclosed governance holdings clearly presents an information asymmetry.
Before further transferring governance power, the DAO needs to fully understand the voting influence held by the recipient.

What I Support and Reserve

I support the overall direction of this proposal: revenue alignment is correct; brand and IP held by the foundation is reasonable; V4 as a long-term technical pathway has a logical basis; the DAO should acknowledge this fact: sustained, rational governance intervention is producing tangible results.

But direction does not equal execution, and the Temp Check should not be seen as an authorization.

Four Things to Complete Before Proceeding

I recommend completing the following steps before advancing any substantive allocations:

Split the Votes
Revenue alignment, V4 confirmation, foundation establishment, fund requests should be deliberated as separate proposals.

Ensure Foundation's True Independence
Before any fund transfer, an independent foundation holding all Aave IP, trademarks, and brand rights should have been established and verified.
The term "independent" should be reflected in the board structure and governance mechanism, not just at the level of legal documents.

Comprehensive Wallet and Governance Disclosure
Any entity receiving funds from the DAO and AAVE tokens should disclose all wallets they directly or indirectly control. This standard should apply equally to all service providers.

Introduce an Independent Revenue Verification Mechanism
The term "100% revenue" should be defined and verified by an independent auditing firm, and any deductions should have a cap or require DAO approval.

These requirements are not a rejection of the proposal but rather an enhancement to its feasibility and credibility. If these arrangements are already part of the plan, explicitly stating them in the Temp Check will only increase community confidence.

Once these conditions are met, the DAO is poised to rationally evaluate funding proposals in a transparent and verifiable manner.

It's been a day of Aave governance to be proud of. The community drove alignment and it was met with a response.

The next step is to ensure that this response is authentic, actionable, and fair to all token holders.

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