If there’s one thing crypto proved over the past few years, it’s that foundations are terrible and should be avoided at all costs. They entrench bureaucracy, have bad incentives and are inefficient.
See this for more.
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I did not think of this level of conflict of interest would exist at Aave. Aave Labs is trying to justify their position but essentially, Aave Labs is siphoning significant revenue that could go to the DAO.
The value from the swaps function is not truly derived from generating and maintaining the code. The DAO can contract any team to do that for a fee. If I make swap code and deploy it in my basement, I’m not going to earn $10 million dollars.
The value accrues because there is an enormous amount of TVL on Aave and Aave users conduct swaps. This value should then all go to the DAO and then the DAO can pay Aave Labs an appropriate amount for their services to the DAO.
The Aave DAO should have every right to vote for how fees generated from its users are directed.
Is Aave Labs going to continue to create Aave products on top of the Aave users and strip future potential income from those efforts from the DAO? This is what it looks like to me.
I understand that there should be payment to Aave Labs for what they create, but that should come from the DAO in a clear and approved way.
And yes, it is $10 million in run-rate revenue at the new fee rate which is worth hundreds of millions considering an appropriate multiple.
7 Likes
Given that I really have 100% visibility on some of the topics, I would like to leave some comments:
The conversation in some places has degenerated into “how much the Aave DAO received from the Paraswap integration” and pointing out that it was not the $10m or $15m floating around. That’s true, it was (@TokenLogic can confirm numbers) lower previously. And even the type of revenue was not a “fee”, but a kind of referral program introduced by ParaSwap.
But that is totally irrelevant, not even the core problem here; the problem is the fact of having the app.aave.com orderflow and privately monetising it.
Some clarifications:
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On the ParaSwap integration, sure, it was kind of a referral, an initiative from the ParaSwap DAO/org. But that was the way of ParaSwap of keeping integrations bringing from tens to up to $200m volume per day to their DEX. Everything is public, can be checked on the Paraswap side HERE.
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This volume is called orderflow, the orderflow that comes due to the application being hosted on app.aave.com; brand recognition. This is totally evident, akin to a website with high traffic, adding a widget to swap assets in, let’s say Uniswap.
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The numbers of the OP of estimated revenue for Labs seem to be based on data from last weeks/months. Once again, I think @TokenLogic should check more in detail, but for what I see in the final wallet recipient, this is for example the last payment
https://debank.com/profile/0xf38b417b8c1bf2a0b81a356fe2014da8dbb44306/history?mode=analysis
Considering that seemingly only now are all features “migrated” to CowSwap, that seems like a good ballpark number, sometimes higher, sometimes lower. Then it is just a matter of checking historic volume before with ParaSwap, applying some weighting to the current market, and estimating. Definitely, the number seems to be in the ballpark of $10-20m/year. -
This traffic/integration on app.aave.com is extremely high value. Because it is not only that users can swap there, it is that users have funds on the biggest DeFi protocol, and obviously for it is better to do swaps or modification of their Aave position in the same place.
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It is not really serious that we are discussing that in all senses, the protocol and the “product” have totally “in substance” different ownership. Even if that were the case (which is highly dubious), the brand should be on the final stakeholders, which are the AAVE token holders. Defending a position of the Aave Labs legal entity owning, in practice, the trademark, domain, and communication channels, and monetising directly/indirectly privately, is nonsense, first, second, lack of good faith.
I mean that it is perfectly possible to have a feature like swaps benefiting the DAO solely even if the DAO can’t hold a domain at the moment. I mean that it is possible to just not use aave.com and aave social handles for advertisement of private products, even if the DAO can’t neither hold a social handle.
I mean, let’s try not to be disingenuous or make fools out of readers. -
Again, it is not even too relevant with the core problem being redirection-ownership of the orderflow, but the majority of the features were part of Aave as a whole. It is disingenuous and misleading not to say that, and very simple to check:
https://medium.com/aave/the-aave-protocol-v2-f06f299cee04
In the previous picture, we can see how they are announced as part of the v2 release, where the initial features were introduced. Yield & Collateral swap are currently called aToken/liquidity swap and collateral swap. Repayment with Collateral is the same. And Debt Swap was introduced later, with the contracts developed by the team I’m part of (BGD Labs), and plugged of course into the UI by Aave Labs.
Then the additional features added (Withdraw and Swap, and “plain” token swap), were introduced later, and I think there should not be any doubt that a “plain” token swap not involving Aave at all and using an external swap provider is valuable because of the orderflow.
And to be very precise about the swap features: they are not part of the core protocol, more of the so-called “periphery”. But we have been building for years on the DAO, maybe 60% of what can be defined as “periphery”, and that doesn’t mean that they are not products/sub-systems of the DAO. There is an endless list; I will not share it here. -
Another point, which, even if not so relevant, needs to be clarified because there is quite a lot of misleading information. I think not assuming that ETHLend, Aave v1 and v2 were “compensated” with the proceeds of the ICO end of 2017, is ridiculous. I’m not saying that @stani didn’t do a good job leading the team and developing the best product for the LEND (later AAVE) token holders, but there was funding directly.
Then, v2 started to be a self-sustainable product, and Aave Labs (in my opinion, totally legitimately) asked for retroactive funding for Aave v3. And even if again, not so relevant, the v3 UI was compensated by the Aave DAO on the retroactive funding. This is not even my interpretation; it is here on the forum and has been voted on
https://governance.aave.com/t/arc-aave-v3-retroactive-funding/9250?u=aavecompanies#p-21219-what-is-the-compensation-model-based-on-6
I mean, we can start discussing semantics, but to not understand that for a new product, with the development entity mentioning as the cost to cover, the interface is not part of the “package”, it is ridiculous. -
A good representation of this situation, being pretty evidently not good, is what there is when simply opening aave.com. The following.
From aave.comThe “Aave App” is a private product of Aave Labs.
Really, does anybody think that it is legitimate to at the beginning of the main point of access to see anything about Aave, a private product not owned at all by the DAO, is linked/advertised? Should a long-term integrator of the protocol, like let’s say DefiSaver, have that type of crazy high visibility and advertisement? Or anybody else?
32 Likes
The success and liquidity of Aave cannot be attributed solely to immutable smart contracts, but also to the trusted, widely recognized Aave interface through which most users interact with the protocol.
Because that interface effectively defines the canonical user experience and orderflow, governance over revenue-impacting changes at this layer is essential for maintaining alignment between the DAO, contributors, and tokenholders.
Notably, the distinction between “frontend” and “smart contracts” was not a meaningful axis of separation in the original ETHLend whitepaper or early Aave design. The project was funded via the ICO (and later a subsequent funding round) under the premise that tokenholders were collectively backing the full system — including the brand, distribution, and user interface — not just isolated smart contract code.
From that perspective, treating interface-level monetization as economically separate from the protocol is difficult to justify. An appropriate analogy would be a company that IPOs the vast majority of its equity and later argues that new revenue streams generated by its primary product surface should accrue exclusively to the operating company because they occur “above” the core product. In traditional markets, such a structure would be viewed as fundamentally misaligned and unlikely to be sustainable long term.
This is not an argument against compensating contributors or service providers. It is an argument that the canonical Aave interface should be treated analogously to a protocol component, and that any interface changes that introduce or modify revenue flows must be explicitly approved by governance.
4 Likes
Agree, Fondation alone might not be the solution
but a foundation + an OpCo is a model worth considering
With the size of the DAO and the number of SP now working for the protocol, it’s probably the right time to think about it.
As a tokenholder, after reflecting on the discussion, I think this topic would benefit from being addressed more systematically through an ARFC focused on frontend and brand usage principles. The goal would not be to challenge Aave Labs, but to establish shared expectations and reduce ambiguity going forward.
It is fair to note that the Aave DAO does not legally own the frontend or operating entities, and Aave Labs has played a central role in building and maintaining the ecosystem. At the same time, this conversation is less about legal ownership and more about economic alignment and governance clarity. As @eboado has point out, the DAO did indeed pay for the frontend (Via ICO and v3 retroactive funding ). Many people feel uneasy about privatizing swap fees and other aspects, such as placing a private company as the main landing page of Aave or calling it “Aave App“.
The DAO:
- Governs the Aave protocol and its parameters
- Controls the AAVE token, treasury, and incentive mechanisms
- Funds and oversees contributors (including Aave Labs) through governance
- Stewards the Aave brand, identity, and user trust that make the frontend valuable
For that reason, it seems reasonable for tokenholders and contributors to collaboratively define how value generated through DAO-endorsed frontends and integrations is attributed and shared.
In other words, this is less about asserting ownership and more about:
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Value attribution (where does economic value originate?)
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Incentive alignment (who benefits from that value?)
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Governance accountability (what arrangements are acceptable to tokenholders?)
An formal AIP would allow the community and Aave Labs to align on these issues and I believe this approach would strengthen long-term alignment, provide clarity to everyone and help avoid recurring debates around similar integrations in the future.
Thanks to @EzR3aL for creating this thread. I would wait to see if @TokenLogic @karpatkey_TokenLogic will add a more finance perspective on these issues.
12 Likes
Hey folks, Hilmar here, long time Aave frend.
pretty unbiased here, but to me it looks like the situations seems pretty clear:
Aave labs is company with its own shareholders that owns its own IP (eg UI, mobile apps, etc) and the Aave trademark. The aave DAO owns the onchain protocol and its associated onchain fees. From a high level perspective Aave labs therefore can decide how to monetize its own IP and will have the incentive to accrue that value to its shareholders. Token holders are not aave labs equity holders. That’s most likely the case from the time it was literally illegal to have token holders have ownership and control over companies like aave labs, thus how the current situation ended up like it did today.
For me, the real conversation should be how to better manage expectations in the future and discuss options if there is a path to either accept this dynamic or find a deal to change it.
I see two options:
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accept the fact that Aave token holders control the onchain protocol and that’s it. Every fee created by IP and products built around it are not part of the Aave DAO and its token holders. Everything stays as it is
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change the current structure, for example by having the Aave DAO make an “offer” to acquire the trademark / certain IP from aave labs based on its current fair valuation. This could be done by doing a deal where eg a foundation / structure similar to what Rainbow Wallet is doing which is benefiting Aave token holders by purchasing IP, trademarks or even invest in Aave Labs. For this to happen, someone would need to come up with a deal structure and propose this to the DAO, eg a company like Areta which do M&A deals.
I understand both sides, but definitely see the point @stani is making around there being a trade off between trying to build the best possible consumer products and being limited to only building on top of a single onchain protocol. Sky also realized this and changed their structure to be able to be less opinionated about which protocol should be used to eg find the best yield. Asking Aave Labs to just forgo all of their IP and trademark rights for nothing doesn’t seem to be reasonable request, where incentives seem pretty misaligned to make it work long term.
Again, pretty unopinionated here and I currently neither hold Aave tokens nor shares in any aave associated company.
8 Likes
This IMO is indeed the cleanest solution.
It’s pretty clear that Aave Labs and the Aave DAO need each other, and Labs’ work has been immensely valuable over the years, conflict is really in the best interest of no one.
The DAO could acquire an equity position in Aave Labs. According to this dashboard, the DAO has over $220M in assets, more than enough to acquire such a position.
Of course this would require 1. Aave Labs to agree and 2. a minimal legal entity to be created that would own the shares on behalf of the DAO.
But it’s the cleanest solution, aligns everyone’s incentives, and leads to the best outcomes for everyone long-term, in my opinion.
3 Likes
I want to express one final message because after reading everything, I see we’re losing focus on the core dispute. I want to get to the heart of the problem, to the root, which in my view is a matter of: who owns what?
Labs argues they have authority over the IP, branding, interface, domain, etc., since the DAO can’t legally own anything, so they’re positioned to be the “owners” of that apparent legal void. My question is: what’s the point of having a DAO then? For years, DeFi projects used DAOs as shields to navigate regulatory obstacles. Now we’re in an era with much greater regulatory clarity and a significantly less hostile environment for DeFi developers.
No one doubts AAVE Labs’ contributions to the AAVE project, but their attitude has consistently been misaligned with the DAO’s interests. This problem stems from a fundamental conflict of interest inherent in the DAO vs. equity/token structure.
The DAO likely has no interest in AAVE Labs equity—why would it? The DAO wants EVERYTHING related to AAVE and won’t allow service providers to have ad-hoc products that siphon fees through them. What’s the point of investing in $AAVE? On-chain governance? That’s a DeFi Summer meme. We’re at the end of 2025, and we can definitively say that DAOs are a bug, not a feature. Aave thought it could be the exception to the rule, but economic conflicts and human ambition make it incompatible.
I see two paths forward:
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The DAO is the umbrella for everything. Literally EVERYTHING. Aave Labs must relinquish control over AAVE-related assets like the domain and interface. If they want to expand their entrepreneurial ambitions into other areas, they’re welcome to—as they attempted with Lens, Family, etc. But everything AAVE must go through the DAO.
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Dissolve the DAO, Uniswap-style. Hayden must have seen this conflict of interest coming and preempted it in his strategy, seeking to generate value for the $UNI token while keeping “everyone happy.”
If we don’t choose a path, we’ll end up diluting token value. To date, no one has presented a serious tokenomics proposal to give the token real value and utility. The Hyperliquid operating model is worth studying—allocating 99% of fees to the token is a bold move. Here, everyone is defending their own turf, and no one is genuinely looking out for token holders.
I want this problem resolved immediately, because otherwise we’ll face the same conflict with the AAVE mobile app—who owns it? Who decides the fees? As an AAVE holder, I want this childish circus to end, and I want the leaders of each service provider to voice their opinion and present a solution. It’s embarrassing that AAVE, as DeFi’s most important project, is projecting such a poor image across the entire crypto ecosystem.
Stani, I’m asking you to please reflect on this, because Labs is doing exactly what Gauntlet did.
AAVE holders have been patient enough with getting nothing in return for years. We “swallowed” the excuse that growth must come first, but clearly everyone is looking to extract maximum value at the expense of holders and through dilution. I hope my words haven’t made anyone uncomfortable, but I’m extremely frustrated with this entire situation and the fact that the ecosystem hasn’t improved at all since DeFi Summer.
Additional reading material worth your time:
https://x.com/defiignas/status/1999728596626342177?s=46 Thanks @Ignas
18 Likes
Disagree. These decisions are controversial because of the impact they have on the DAO and users. Communicating them better doesn’t change the impact they have.
1 Like
Foundations definitely have downsides, but so does heavy reliance on a single service provider who has no fiduciary duty to the DAO.
Many of these issues can be addressed as well with a limited Foundation that holds assets like the IP and website. This would prevent service providers from having leverage over the DAO through essential assets that are needed to reach users.
1 Like
First, we need to clearly define what Aave is.
Based on my fundamental understanding, Aave is a DAO (Decentralized Autonomous Organization). Being “Autonomous”, from a legal-theoretical perspective, meaning managing and handling civil matters according to its own collective will, with decision-making executed through voting.
However, a DAO has an inherent limitation: it is not a legal person or legal entity in the present real world. As a result, it cannot directly hold assets such as trademarks, domain names, or similar rights in the off-chain legal system.
According to my understanding, such assets (including trademarks and domain names, etc.) are therefore held by Aave Labs in the real world on behalf of the Aave DAO.
If Aave Labs holds a different view on this point, and this discrepancy must be clearly clarified here. @AaveLabs @stani @Emilio
From my personal perspective, if you clearly insist that this is your own property and you have full discretion to operate and monetize it, then I kindly ask that you step away from the DAO and focus on running your own company.
If, on the one hand, Aave labs claim that this is their private property, while on the other hand use their dominant position within Aave DAO and its resources to pursue their own interests, then my decision is to vote with my feet by never hold AAVE token again, because Aave DAO would have lost its very definition and core values.
Second, as @eboado demonstrated, “the swap services are announced as part of the v2 release, where the initial features were introduced”.
Aave Labs current denial of this point demonstrates that you are lying, you have no honesty, no credibility, and no public trust. If commitments are made but not honored, then those words are empty and undermine trust.
In the real legal and social systems, breaches of trust are subject to sanctions. I propose that Aave DAO initiate a governance vote to determine appropriate sanctions for this conduct.
Third, if the above issues are properly addressed, I suggest that Aave DAO consider creating an independent oversight mechanism to prevent similar instances of private gain at the expense of the collective from occurring in the future. I suggest that @EzR3aL takes the lead on this effort!
As he was the one who surfaced this issue and thereby contributed to improving Aave DAO’s governance, I believe it would be appropriate for Aave DAO to recognize this contribution with a financial reward.
13 Likes
@eboado, thanks for the detailed context.
You are right that the ParaSwap “fee” people keep quoting was not a protocol fee. It was referral / surplus mechanics from Velora that happened to route value back under that specific execution path. There was no separate agreement behind it, and governance never set a standing policy that swap routing surplus must be donated to the DAO.
Where we disagree is calling the current situation “privately monetising the app.aave.com orderflow.” The swap route inside app.aave.com is an application-layer feature built permissionlessly on top of the Aave Protocol. It does not require contract ownership or governance approval. The CoW partner fee is also an application-layer fee that funds the ongoing cost and liability of operating these flows inside the interface. These were built without asking the DAO to bear the costs as we believe self-sustaining our products keeps us more aligned with the DAO.
The right question for the DAO is whether the Aave Labs’ interface should be expected to pass partner fees to the treasury, and under what operating model. That is a valid governance discussion, but it has to be an explicit policy decision with clear scope, not an implied entitlement carried over from a referral mechanic on a previous route.
On the aave.com homepage point, it is not an Aave Labs product showcase. It is a protocol entry point. It includes protocol overview material, builder resources, security and audits, live stats, and governance context, including work delivered across DAO service providers. Product surfaces are present because they drive the largest share of protocol usage today, and that usage is what ultimately funds SP work through protocol revenue, as it has successfully been the case for the previous 8 years.
5 Likes
If aave.com is merely a protocol entry point, Aave Labs probably won’t mind if the protocol votes on the company that decides the content to be shown in the protocol entry point?
3 Likes
Imo, this is the main point. The potential revenue from this kind of initiative is massive.
How much would it cost for the Aave DAO to hire a third party to develop it for the DAO, such as ConsenSys or another firm? Certainly not 10 to 20 million…
4 Likes
I would like to summarize some things and get final answers, without talking around the topic. Just a clear yes or no.
Additionally I would like to keep this conversation focused on the current “problem”, which is the CowSwap integration. Other topics like v4, MegaETH, etc. can be discussed in the according threads/proposals. Otherwise we will never be able to end this conversation and find a solution to move forward and crush competition, as we did yet.
Facts:
- 10-15m$ are annual estimations from so far received fees from the CowSwap integration, based on past data I reviewed. It is not, what has been received in the past from Paraswap.
- Paraswap revenue was not a fee but part of a referral program, as I stated in my initial post, coming from surplus from trades.
- The Aave frontend is successful, because the Aave protocol (backend) is improved, managed, maintaned and developed by the Aave DAO. Its only working together.
No good entry point = no deposits, borrows, etc.
No good backend = no frontend needed, as there is nothing to be used in big volume. - Aave.com and the Trademarkt for “Aave” are owned by Avara through Quantum Swan OÜ.
Questions:
Just a clear yes or no. As proof is being presented here.
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Has the DAO funded development of the Aave frontend, as stated here ARC: Aave V3 Retroactive Funding?
If not, what did it pay for? Exact explanation, no coporate answer please. -
Is Aave Labs open to discuss a solution where the DAO would receive the swap fees and in return receive a reasonable sized yearly maintenance fee for hosting the frontend?
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Is Aave Labs open to discuss a model on applications using domains correlated to the Aave brand like Aave.com or any other brand correlated initiatives?
Again, please answer in simple Yes or No to these questions. Otherwise we won’t be able to find a suitable solution for everyone.
If there is a path, we could move on and work together as a DAO on a proposal that can be presented to the DAO and it can vote on it.
Additionally I would like to add a quote from a person I really respect a lot.
“As long as we have a good trust relationship and can trust each other thats all that matters to me”
Same applies to me and the DAO.
Just use Aave.
22 Likes
This is a super important point. For defi to really work in the long run, the top protocols will need to operate like open source businesses. It will be the benefits of open platforms that ensure their sustainability, which means their onchain business moat will be the protector of their IP. Remember, all of this is suppsoed to be forkable, but the liquidity will not be forkable
2 Likes
So Gnosis/CoWswap’s Stefan George and Aave’s Stani Kulechov are both investors at KPK. KPK was recently booted as Gnosis treasury management company in a very close vote because they were taking large fees for almost no work (Gnosis’s DAO agreed you don’t need a paid service to do nothing). During this discussion the Gnosis forum was brigaded by KPK employee accounts pretending to be DAO members and Stefan even spoke in support without disclosing his investment in KPK.
The question comes up, does Stanislav Kulechov have any investment in CoWswap? What exactly is the relationship between Stefan George and Stanislav Kulechov? Was this a you scratch my back I scratch yours deal where Stefan got Stanislav an investment in KPK which had an easy money stream taking care of Gnosis’s treasury and Stanislav got Stefan’s CoWswap integration into the Aave website?
CoWswap also contains many employees/owners of KPK such as Marcelo Ruiz de Olano it’s co-founder. KPK also serves as the treasury manager for CoWswap. So we have a company Stanislav is invested in directly receiving money from CoWswap which receives money from Stanislav’s Aave. Did CoWswap award KPK the contract in return for Stanislav getting CoWswap the Aave contract?
This isn’t just suspicion, this is a direct conflict of interest between two companies Stanislav is invested in where Stanislav personally profits from the decision. This is why in any business you disclose the conflict and step back, Stanislav should not have been involved in the decision to use CoWswap. Stanislav is not Elon Musk he doesn’t own Aave 100% and does not get to use the DAO’s funds to enrich himself. This is corruption at the highest level, Stanislav made money personally by taking away from Aave DAO.
edit: to add, it’s come to light KPK does work for Aave’s treasury management and for Aave labs. Given that Gnosis booted them for overcharging for little service despite the co-founder of Gnosis owning part of KPK and fighting it, I’d suggest Aave should follow their example even if the founder of Aave who owns part of KPK fights it.
edit2: I wasn’t aware that KPK no longer manages Aave’s treasury or Gho but have been told that they no longer do.
Fully expect my post to be deleted or me to be banned from the forum after posting this.
2 Likes
By the way, I just realized a key and urgent issue: to date, the other party involved in this integration, CowSwap has yet provided any clarification.
I thus suggest that Aave DAO initiate a formal inquiry to CowSwap, with a particular focus on having CowSwap address two specific questions:
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Whether they were aware of the ownership of the wallet to which they made the payment: Aave Dao Treasury or Aave Labs?
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Who they believed this fee was intended to be paid to: Aave Dao Treasury or Aave Labs?
I further propose that a governance vote be initiated: if CowSwap fails to provide a clear and explicit response within 24 hours, Aave DAO should suspend this integration; furthermore, if their response indicates that they believe the payment was intended for Aave Labs, Aave DAO should likewise suspend this integration.
8 Likes
Can we please put an end to this and revert the update?
Aave Labs can then submit an AIP to request additional funding for OPERATING the frontend on behalf of the DAO (given that the frontend itself wasn’t newly developed and was already covered under the retroactive funding for Aave v3)
At the moment, the lack of clear communication is creating unnecessary confusion and making the DAO look disorganized to the broader DeFi community. Competing protocols have been amplifying this uncertainty for days, framing it as a precedent that could extend beyond frontend fees to core protocol revenues
I’ve personally heard serious concerns from large, long-term holders (in the seven- to eight-figure range) who are now considering exiting their positions because of this situation
This is actively harming both the AAVE DAO and the Aave brand. It’s time to stop
9 Likes