[ARFC] Service Provider Compensation Reform for V4 Alignment

Governance
1

[ARFC] Service Provider Compensation Reform for V4 Alignment

Author: ACI

Date: 2025-10-10

Summary

This ARFC proposes a comprehensive reset of all active Aave service provider compensation streams to better align contributors with the success of the Aave ecosystem ahead of the Aave V4 launch.

The proposal maintains the same total annual compensation levels for each provider while introducing a one-year vesting component tied to clear key performance indicators (KPIs).

Motivation

As stated in the State of the Union post, Aave DAO should seek to ensure that the service providers who contributed significantly to Aave’s success are directly aligned with the protocol’s growth and long-term sustainability.

The goal of this reform is to reset and unify the compensation framework for all key service providers, ensuring alignment with Aave V4 delivery milestones and improving transparency around deliverables.

Key motivations:

  1. Alignment with AAVE performance – linking compensation to measurable outcomes.
  2. Preparation for V4 – establishing a synchronized, goal-driven working structure across contributors.
  3. Simplicity and fairness – resetting all streams equally for a one-year term.
  4. Long-term alignment – variable revenue sharing proposed in the State of the Union will be postponed to V4 rollout and finalized thereafter.

Note: While aligned and considered a key service provider of the Aave DAO, BGD Labs has preferred to opted out of the compensation reform and crafted its own proposals. The ACI respects their decision and will support their standalone proposal.

Specification

The following structure will apply to all primary Aave service providers:

Provider Annual Stream (Reset) KPI Vesting (1 year) Immediate Grant
ACI Same as previous stream $750K AAVE vested 12mo, KPI-based $250K AAVE (30d TWAP)
TokenLogic Updated to 2.5M GHO $750K AAVE vested 12mo, KPI-based $250K AAVE (30d TWAP)
LlamaRisk Same as previous stream $750K AAVE vested 12mo, KPI-based $250K AAVE (30d TWAP)
Chaos Labs Same as previous stream $750K AAVE vested 12mo, KPI-based $250K AAVE (30d TWAP)

Overall compensation reform parameters

  • All current service provider payment streams are stopped and replaced with new streams, effective immediately upon AIP execution.
  • Each provider receives $250K worth of AAVE (30-day TWAP) distributed at proposal execution.
  • Each provider receives $750K worth of AAVE vested linearly over 12 months, subject to KPI success.
  • KPI performance threshold: 85% success rate of defined deliverables completed within official deadlines.

KPI Definitions

ACI

  • Skywards TEMP CHECK business case + ARFC publication + Snapshots + Draft AIP payload delivered for review within deadlines.

TokenLogic

  • Monthly buyback management execution completed, and Finance AIP payload submitted on time each month.

LlamaRisk

  • ARFC risk reviews delivered within the defined review period and aligned with publication deadlines.

Chaos Labs

  • ARFC risk reviews delivered within the defined review period and aligned with publication deadlines.

Incentives

The KPI-linked vesting ensures that each provider remains motivated and outcome-oriented throughout the V4 development cycle.

This structure simplifies future variable alignment mechanisms expected for V4 (e.g. revenue-based components) while immediately aligning contributors through AAVE token exposure.

AAVE Streams

The AFC will set up the AAVE streams via Llamapay vesting service, leveraging their AAVE reserves sourced from buybacks. Every month, KPI compliance will be monitored. If a service provider stays below the 85% threshold for two consecutive months, their stream will be terminated by the AFC, and undistributed AAVE will return to the AAVE DAO.

Disclosure

This proposal is based on the Aave State of the Union initiative and is not sponsored or compensated by any service provider. ACI authored this proposal in coordination with the involved contributors for DAO consideration.

Next Steps

  1. Collect community and Risk Service Provider feedback on the ARFC.
  2. If the Snapshot outcome is YAE, escalate to an AIP for implementation.
  3. Begin vesting streams and apply KPI monitoring through the governance framework.

Copyright

Copyright and related rights waived via CC0

1 Like
2

LlamaRisk supports this proposal. We thank @ACI for leading this effort and the DAO for its continued trust. This proposal reinforces our long-term commitment to the Aave ecosystem and strengthens our confidence in this focus.

Resetting our stream provides essential operational certainty and a stable runway as we head into the launch of Aave V4, particularly during the expected period where V3 and V4 will coexist.

We are committed to meeting all KPIs and delivering high-quality risk services. For complex reviews that may require more than the 5-day window, we will always ensure proactive and transparent communication with all stakeholders.

In the spirit of full transparency regarding the grant, we may use the immediate AAVE allocation to expand our team. We are currently at capacity covering both V3 scope and V4 R&D, and these funds could directly translate into increased bandwidth and more deliverables for the Aave DAO.

We are excited to continue securing the protocol and look forward to its continued safe growth and adoption.

3 Likes
3

TokenLogic is very aligned with this proposal and fully supports the direction ACI is taking with this compensation reform.

We believe this initiative comes at the right time, as it sets a clear and fair framework ahead of the Aave V4 launch. The introduction of KPI-based vesting is the best way to ensure accountability and long-term alignment between contributors and the DAO, without changing the overall balance of compensation.

For TokenLogic, the proposed KPIs, focused on buyback execution and Finance AIP delivery, are well designed and reflect the core responsibilities we’ve taken on within the DAO. We’re confident this approach will help streamline operations and improve transparency across all service providers.

We also want to thank ACI for the effort and coordination behind this proposal. It provides clarity, fairness, and a unified structure that will help all contributors move forward together under a shared vision for Aave V4.

2 Likes
4

The current proposal has been escalated to ARFC Snapshot.

Vote will start tomorrow, we encourage everyone to participate.

5

Chaos Labs supports this proposal and welcomes the introduction of a structured, performance-based compensation framework that further aligns service provider incentives with the long-term success of the Aave DAO. We would like to express our appreciation to ACI for taking the initiative and leading this important effort, and look forward to continuing our collaboration with the DAO and contributing to the successful rollout of Aave V4 under this unified framework.

1 Like
6

After discussion with service providers, The proposal was edited to implement a 30D TWAP considering the currently highly volatile market conditions.

7

After Snapshot monitoring, the current ARFC Snapshot ended recently, reaching out both Quorum and YAE as winning option with 867.2K votes.

Therefore [ARFC] Service Provider Compensation Reform for V4 Alignment has PASSED.

Next step will be the publication of an AIP for final confirmation and endorsement of the proposal.