Aave Labs Faces Community Scrutiny Over Revenue Management

The Aave community is grappling with a significant ownership issue that has sparked intense discussions regarding revenue management. Both the Decentralized Autonomous Organization (DAO) and service providers associated with the protocol are in a tug-of-war over the distribution of funds.

Key Takeaways

Aave is experiencing a crisis over ownership of service revenue, particularly regarding Aave Labs.
Recent changes have led to an estimated annual loss of over $10 million for the DAO.
Community delegates express concern over a potential privatization of protocol revenue.
Aave Labs defends its role and contributions to the protocol despite the controversies.

Aave Labs faces community scrutiny over token value accrual, $10M loss

Understanding the Ownership Conflict

The core issue revolves around Aave Labs, which serves as a contractor responsible for certain features of the DeFi lending protocol. Governance participants assert that service providers, including Aave Labs, were paid directly by the Aave DAO. Consequently, since the DAO funded the development, it claimed full ownership of the user interfaces, branding, and associated fees.

However, a recent integration with CowSwap has shifted this dynamic. Under the new agreement, fees from swaps are no longer directed to the DAO's treasury. This development has raised concerns among DAO delegates, with one estimating that this situation could result in an annual revenue loss exceeding $10 million, based on a transfer of $200,000 weekly.

Critics pointed out that CowSwap replaced ParaSwap, which had a profit-sharing arrangement with the DAO, thus leaving the DAO out of the current revenue framework for the private provider.

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Delegates Sound the Alarm

This year, Aave Labs introduced a tokenization project, Horizon, but the DAO rejected the proposal. Marc Zeller, founder of the Aave-Chan Initiative and a DAO service provider, criticized the perceived privatization of revenue as "concerning" and a "clear attack" on tokenholders.

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Another venture capital partner, Louis, shared similar sentiments, urging AAVE tokenholders to counter the potential long-term risks posed by competing equity vehicles that could undermine the DAO.

Aave Labs Responds to Criticism

As the DAO undertakes a token buyback strategy, which contributes to value for tokenholders, Aave's founder, Stani Kulechov, defended the contributions of Aave Labs over the past eight years. He highlighted the ongoing innovations like Aave V4 and GHO, which are intended to generate revenue for the Aave DAO.

On-chain data from Blockworks Research revealed that Aave saw over $15 billion in net deposit flows in the third quarter of 2025.

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Despite the ongoing discussions, the price of the altcoin has remained stable, fluctuating around $200 over the past week.

Conclusion

In summary, Aave Labs is facing significant scrutiny from the community concerning the management of revenue and services. As debates continue around the ownership of funds and the direction of the protocol, the future of Aave may hinge on how effectively these challenges are addressed.