Original Title: The DAO Won, but the Deal Isn't Done
Original Author: @Marczeller
Translation: Peggy, BlockBeats
Editor's Note: After the phased realization of regulatory risk, Aave faced an even trickier test at the governance level. On February 13, Aave Labs released a new governance proposal, promising to allocate 100% of the revenue from Aave brand products to the DAO and to push for V4 to become the technological core of the protocol's future, which is seen as a positive response to community disputes over the past few months.
However, a review of the event's context reveals that the core of the dispute is not merely an income distribution adjustment, but a long-standing tension centered around revenue ownership, brand ownership, and governance power boundaries. From a crisis of trust triggered by front-end product changes to suspicions of whale sell-offs, founder buybacks, and governance manipulation, this conflict has exposed unaddressed structural issues between the developers and the DAO.
Related reading: “Tokens vs. Equity: The Background of the Aave Dispute”
This article attempts to clarify how this governance conflict escalated and examine which key demands the current proposal responds to and which unresolved issues remain. The Aave controversy continues, but it has provided the entire cryptocurrency industry with a highly realistic governance model.
Author's Note: The author of this article is the founder of the Aave Chan Initiative (ACI). ACI serves as an agency platform for Aave DAO and is also one of the service providers.
Here is the original text:
This proposal is essentially a phased victory for Aave DAO governance.
In December last year, a truly independent agent @EzR3aL raised questions about revenue ownership, triggering a series of discussions in the community around income alignment mechanisms, governance transparency, and the boundaries of the relationship between Aave Labs and the protocol. As of now, Aave Labs' responses include: diverting 100% of Aave brand product revenue to the DAO treasury, confirming V4 as the unified technological foundation, and establishing a foundation that holds the brand and IP.
These changes did not occur spontaneously but are the result of continuous pressure from governance. In other words, this is a manifestation of effective governance.
The direction is correct. I have long publicly advocated for this token-centered approach to interest alignment. The goals are not misaligned, but the current proposal still requires clarification and correction at the execution level. Before voting, it is necessary for the community to fully understand the key details involved.
First Clarify the "Details"
The core statement of the proposal is: “100% of Aave brand product revenue belongs to the DAO.” This is a clear and positive commitment and demonstrates that decentralized governance can yield real outcomes. However, a prerequisite for governance is a strict examination of the terms.
The Definition of "100% Revenue" Should Not Be in the Hands of Labs
In the text of the proposal, "revenue" is defined as: total product revenue, minus partner shares, revenue returns, subsidies, and additional direct user incentives.
The problem is that all the above deductions are solely decided by Aave Labs: there is no independent audit, no clear upper limit, and no requirement for prior or post-approval by the DAO.
The proposal also states: Aave Labs reserves the right to use part of the product cash flow (such as treasury income) directly for user incentives.
"100% revenue" is a highly symbolic statement, but the definition of revenue must reside with the DAO, not arbitrarily defined by the party receiving the funds.
Only by introducing an independent third-party audit and establishing a DAO-approved limit for discretionary deductions can this commitment transform from a slogan into an executable, verifiable institutional arrangement.
This is a minor technical adjustment but has major institutional significance.
The Current Treasury Size Cannot Bear Such a Large One-Time Allocation
As of now, the size of the Aave DAO treasury is approximately $160.9 million, which has decreased by about $44.8 million last month due to market fluctuations. In terms of asset structure, approximately $100.6 million is non-AAVE assets, and $60.2 million is AAVE tokens.
This proposal requests: $42.5 million in stablecoins ($25 million for primary allocation + $17.5 million for milestone allocation); 75,000 AAVE
Just 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 centralized funding request directed at a single service provider, completed through a single vote. Without executable constraints and transparent disclosure, no transfer of funds or tokens should occur.
Aave's Cash Flow Foundation Comes 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 the DeFi space.
Historically, over 95% of the cumulative income of Aave DAO has come from V3 and its predecessor versions.
However, this proposal positions V3 as “approaching the architectural limit” and promotes V4 as a comprehensive alternative at the governance level. Meanwhile, the maintenance plan clearly states: if this framework is approved, it is reasonable to suspend adding new features to V3.
V4 may represent a long-term direction, but one must face the fact that it is still in the testnet stage, has only completed partial auditing, and has not generated any actual revenue.
A more prudent path should involve a dual-track approach: while continuing to protect V3, the $100 million cash flow engine, accelerate independent verification of V4.
Bundling the “confirmation of a not-yet-launched protocol” and “freezing a mature revenue source” into a single vote is evidently too radical.
The governance confirmation for V4 should be based on its maturity and mainnet launch status, completed through an independent proposal.
Voting Matters Should Not Be Forced Together
The FAQ mentions: splitting related matters for voting may lead to fragmentation of plans, making them difficult to execute.
However, from a governance perspective, this is a package of four independent decisions: income alignment mechanism; governance confirmation of V4; foundation establishment; a funding request of over $50 million
Their risk attributes and consensus bases are not the same.
The community already has widespread consensus on income alignment; they may also support the direction of V4 and the foundation; however, there remain significant differences regarding the scale, pace, and constraints of the funding.
Bundling votes means “full acceptance or full rejection.” If each part stands on its own, the community should be allowed to express their opinions separately and make adjustments independently.
75,000 AAVE, Essentially a Transfer of Governance Power
At the current price of approximately $109, 75,000 AAVE is valued at about $8.2 million, which is equivalent to 13.6% of DAO's current AAVE holdings (approximately 550,000 tokens).
Moreover, AAVE tokens themselves constitute voting power.
Previously, I released an on-chain analysis showing that wallets related to Aave Labs infrastructure had participated in voting against the "mandatory disclosure" proposal (which required wallets to disclose and avoid conflicts of interest). That vote is still ongoing, and the supporters are at a disadvantage.
In this context, the proposal requests the DAO to transfer 75,000 AAVE to an entity whose governance holdings have yet to be disclosed, which clearly presents an information asymmetry.
Before further transferring governance power, the DAO must fully understand the voting influence that the receiving party possesses.
What I Support and What I Reserve
I support the overall direction of this proposal: income alignment is correct; having the foundation hold the brand and IP is reasonable; V4 has a logical basis as a long-term technological path; the DAO should face the fact that continuous, rational governance involvement is yielding actual results.
However, direction does not equate to execution, and the Temp Check should not be regarded as a letter of authorization.
Before This, Four Things Should Be Completed
I recommend that before advancing any substantial allocations, the following steps should be completed:
Split the Vote
Income alignment, V4 confirmation, foundation establishment, and funding requests should be reviewed as independent proposals.
Ensure the Foundation is Truly Independent
Before any funds are transferred, an independent foundation that holds all Aave IP, trademarks, and brand rights should be established and verified.
The so-called “independence” should be reflected in the structure of the board and governance mechanisms, not merely remain at the level of legal documents.
Complete Wallet and Governance Disclosure
Any entity accepting DAO funds and AAVE tokens should disclose all wallets that they directly or indirectly control. This standard should apply equally to all service providers.
Introduce an Independent Revenue Verification Mechanism
The so-called “100% revenue” should be defined and verified by an independent auditing agency, with relevant deduction items requiring upper limits or DAO approval.
These demands do not negate the proposal but rather enhance its executability and credibility. If these arrangements are already planned, explicitly writing them into the Temp Check will only bolster community confidence.
Once these conditions are met, the DAO can rationally evaluate the funding proposal under the premise of transparency and verifiability.
This is a day worth recognizing for Aave governance. The community has pushed for alignment and has received a response.
What remains to be done is to ensure this response is genuine, executable, and fair to all token holders.
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