Aave Labs proposes giving 100% of revenue to DAO to end community clash

Aave Labs, the primary software development company and key contributor behind the Aave Protocol, has recently proposed that all product-generated revenue be directed to the Aave DAO treasury, the financial backbone for the decentralized lending protocol.

This move is likely an effort to settle the recent disagreement between the private, for-profit software technology company and the community-driven decentralized autonomous organization. Apart from this discovery, analysts also noted that this action secures the future success of the top decentralized lending protocol.

Regarding this significant step of allocating 100% of revenue, Aave Labs requested feedback on the potential DAO approval of a new initiative, the “Aave Will Win Framework,” during an initial, informal survey held on Thursday, February 12. Notably, the objective of this plan is to position token holders as the principal beneficiaries of the Aave protocol. 

Aave Labs’ proposal sparks mixed reactions in the ecosystem 

Following Aave Labs’s recently announced proposal, sources with knowledge of the situation who wished to maintain their anonymity as the talks were private disclosed that the core contributors to the Aave protocol is committing 100% of earnings, derived from Aave-branded products like the Aave v3 and upcoming v4 protocols swap fees, revenue from aave.com, and other future ventures such as the Aave Card and AAVE ETF, to the Aave DAO treasury. 

These sources also alleged that Aave Labs proposed establishing a new Aave Foundation to manage Aave trademarks and intellectual property. Reports indicate that this suggestion has received mixed reactions from individuals. Critics began raising concerns about the move, though this proposal represents a fundamental shift in Aave’s ownership, positioning it as a test-and-learn initiative to manage a multi-billion-dollar brand through the DAO.

On the other hand, some individuals questioned whether any meaningful loss would actually occur when Aave Labs fulfills its commitment to redirect its revenue model.

In an attempt to answer this question, Marc Zeller, founder of the Aave Chan Initiative and an important member of the Aave DAO, mentioned that “I want to clarify what’s really happening here,” adding that, “We’ve seen this strategy before: start with extreme demands, handle pushback, then present a smaller request as ‘a fair compromise’ while still benefiting greatly.” 

Meanwhile, it is worth noting that the decision on revenue allocation has been made after months of uncertainty over the ownership of Aave, the decentralized autonomous organization (DAO) that has guided the lending protocol since the introduction of its governance token, and Aave Labs, the initial brand developer.

Stani Kulechov initiates talks on revenue sharing and branding

Concerning Aave Labs’s suggestion, reports stressed that the Aave protocol’s development arm also sparked controversy in the community last December after deciding to redirect swap fees from the official aave.com site into a private wallet that the firm managed. Notably, these contributions previously sustained the  Aave DAO treasury. 

In response to this action, one anonymous token holder suggested a “poison pill” mechanism to claim the software technology company’s intellectual property, code, brand assets, and shares. Nonetheless, during a governance vote held over the holidays, this move to transform the firm into the DAO’s subsidiary was not passed.

The outcome apparently prompted Stani Kulechov, the founder and CEO of Aave Labs, to initiate talks on revenue sharing and branding. In the meantime, sources revealed that this event coincided with a period of substantial restructuring at Aave Labs, including the termination of its non-lending Web3 initiatives under the Avara brand. 

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