Aave Labs Faces Backlash Over Unilateral Proposal Vote

In a recent development that has stirred significant controversy, Aave Labs carried out a unilateral vote on an important governance proposal without informing its original author. This action has heightened tensions over the ownership of Aave's brand assets and is reshaping the relationship between the DeFi protocol’s DAO and its founding entity.

Key Takeaways

Aave Labs has come under fire for unilaterally pushing a governance proposal to vote without notifying its author, Ernesto Boado.
The proposal seeks to transfer control of Aave’s brand assets to the Aave DAO, raising concerns about private monetization of these assets.
Stani Kulechov, CEO of Aave, defended the move as procedural, while critics questioned the integrity of the decision amid evident conflicts of interest.
The ongoing situation underscores tensions between founding teams and DAO governance in the realm of decentralized finance.

Aave Labs Faces Backlash Over Unilateral Proposal Vote

Skipping ongoing community dialogues, Aave Labs' swift decision has been criticized as a violation of trust by contributors and token holders. Many view this move as an effort to control the narrative surrounding Aave's valuable assets.

Ernesto Boado, the proposal's author and co-founder of BGD Labs, publicly rejected Aave Labs' choice to bring his ownership proposal to a vote on Snapshot.

“This is not, in ethos, my proposal,” Boado stated.

“Aave Labs has rushed to submit my proposal for a vote with my name attached, without any notification to me.”

He further emphasized that this action “breaks all codes of trust with the community” while productive discussions were ongoing and included diverse input from different stakeholders.

Ownership Control Dispute Escalates

The contentious proposal addresses the transfer of Aave’s brand assets, such as domain names like aave.com, social media accounts, GitHub organizations, and naming rights, from the existing custodians to a DAO-controlled entity through a legally-defined structure.

Boado has specified that any party currently in control of these assets, specifically mentioning Aave Labs and BGD Labs, must transfer them to a DAO-governed vehicle with “strong anti-capture protections” and enforceable legal measures against misuse.

This proposal arose after growing concerns that brand assets were “being used to enable private monetization while supporting products that the DAO has no practical say over, and thus are not the main beneficiaries.“

Recent points of contention include Aave Labs' replacement of Paraswap with CowSwap integration, diverting an estimated $10 million in annual fees from the DAO treasury into private company wallets.

Aave Unilateral Vote Push - Tweet Screenshot

Additionally, another controversial launch of the Horizon market generated approximately $100,000 in revenue while costing $500,000 in DAO incentives.

Marc Zeller from ACI argued that the DAO has effectively “paid four times” for these assets through various contributions, including the original LEND ICO, token dilution to the genesis team, liquidity mining programs, and generous service provider fees.

“It appears to be a clear case that the DAO contributed hundreds of millions of dollars’ worth of assets, paid in cash and tokens, making these assets extremely valuable,” Zeller asserted, noting that recent management of communication channels under Avara’s team failed to elevate the governance debate and only emphasized “one-sided attribution” of Aave's success.

Founder’s Defense Amid Controversy

Stani Kulechov, who holds the title of “CEO of Aave” despite the DAO structure, defended the expedited vote as adhering to proper procedures.

“The discussion has been ongoing for the last five days with various opinions and perspectives,” Kulechov explained, asserting that the Snapshot aligns with the governance framework and that “people are tired of this discussion.”

He mentioned that other service providers have brought proposals for votes outside formal procedures without setting a new precedent, asserting that “the way to resolve this issue is to simply vote.“

However, many observers felt his defense was unconvincing.

Crypto educator Duo Nine suggested that Kulechov’s actions indicate he is “not acting in good faith anymore, too much conflict of interest.”

Industry analyst Ignas drew comparisons to Uniswap Labs, which faced similar equity-token conflicts that ultimately favored token holders by eliminating front-end fees.

This situation highlights essential conflicts within DAO governance when founding teams run private companies alongside decentralized protocols.

While Aave Labs delineates clear separations between “protocol” elements governed by the DAO and “product” layers it claims control over, critics argue this distinction allows for value extraction based on brand recognition that the community collaboratively established.

The controversy arises even after Aave Labs’ recent regulatory victories, including obtaining MiCA authorization to offer regulated stablecoin ramps in Europe and the SEC concluding a four-year investigation following what the lab described as a “significant” defense.

As Aave Labs prepares for the upcoming V4 launch, which aims to simplify complexities into abstraction layers where user experience dictates value capture, the voting now underway—despite the author’s objections—will ultimately determine the community's future direction.