[ARFC] Strategic Opportunity Framework for Friendly Forks and Whitelabel Instances
Author: EzR3aL
Date: 2025-05-04
Summary
This proposal is meant to be an update and upgrade to the existing Framework for Instances and Friendly Forks created by @ACI in 2024.
Motivation
The goal of the first iteration of this proposal (see here) was to create a standard for friendly forks and whitelabel instances. While the general idea was good and is already helpful it is lacking some major specifications and for that reason needs to be reworked.
Aave is currently the number one lending protocol in terms of different metrics for example market share based on TVL or active loans.
[1] Source: https://tokenterminal.com/explorer/markets/lending/metrics/active-loans
Based on the top 6 projects in lending with at least over 500m in active loans (date:26/04/25)
Additionally Aave’s v3 codebase currently dominates the lending category, holding approximately 53% of the market share, which underscores the robustness and reliability of its technology and explains why many projects opt to fork Aave’s code rather than developing their own from scratch.
[2] (Source: https://defillama.com, Aave v3 + Aave v3 forks TVL / Lending TVL, date: 26/04/25)
This means, it has a big community trusting the protocol and its security in the form of its codebase, risk management and other features it is offering like:
- Flashloans
- liquid e-Mode
- safety layer aka Umbrella
- collateral & debt swap
- deep liquidity
- wide asset support
- deployments on several L1/2 (EVM + Non-EVM)
It’s a superior protocol in its vertical. The Aave infrastructure and brand are superior and widely known.
The current form of the friendly fork framework is undermining these features and the Aave brand by asking
- friendly forks for only 10% of their revenue monthly distributed and 3.5% of their total supply at TGE or shortly before deployment if TGE already occurred and
- Whitelabel instances for 20% of their revenue monthly distributed as well as 7% of their total supply at TGE or shortly before deployment if TGE already occurred.
This proposal suggests creating a more detailed framework with different packages the DAO can offer and each package having different terms that have to be accepted from the counterparty.
Specification
The following two scenarios are proposed:
Friendly fork:
- Licensing one specific Aave version
- Social Media support from delegates & service provider at launch
- Risk assessment for initial asset listing evaluation (one-time)
- Security updates & patches two-times only
Whitelabel Instance:
-
Option 1:
- Aave DAO will make an effort but makes no guarantees to use DAO owned tokens to participate in governance through the Aave Protocol Embassy
- Aave DAO and Service Providers will handle deployment
- Social Media support from delegates & service provider at launch
- Risk assessment for initial asset listing evaluation (one-time)
-
Option 2:
- Aave DAO will make an effort but makes no guarantees to use DAO owned tokens to participate in governance through the Aave Protocol Embassy
- Aave DAO and Service Providers will handle deployment
- Social Media support from delegates & service provider at launch
- Risk assessment for initial asset listing evaluation (one-time)
- Umbrella coverage (Insurance fund)
- Ability to use the “Powered by Aave” branding
- Ongoing security updates & patches
- GHO facilitator allowance
In addition I propose the following for each of the scenarios:
Scenario | Profit share for Aave | Token supply to Aave DAO |
---|---|---|
Friendly fork | 15% distributed monthly | 3,5% |
Scenarios | Profit share for Aave | Token supply to Aave DAO |
---|---|---|
Whitelabel Option 1 | 25% distributed monthly | 7% |
Whitelabel Option 2* | 40% distributed monthly | 7% |
*Anyone selecting Option 2 automatically agrees to an Anti-Competition Clause. This means you are prohibited from promoting, collaborating with, or implementing code from competitors within the lending sector to not harm the Aave brand, code and its assets.
Additionally I propose the following for all scenarios:
- No time limits on profit share
- No minimum revenue hurdle before profit share kicks in
Extra-Clause for Aave DAO Service Provider & Delegates:
If a DAO Service Provider or Delegate opts for a Whitelabel Solution, they agree to allocate at least 50% of profits to the Aave DAO. Additionally, if they introduce a token for this instance, they must distribute 55% of the token supply to aAAVE, and stkAAVE holders. This serves as a security mechanism for Aave token holders & their investment as well as a sign of commitment towards the Aave DAO.
If deployment of an instance holds outsized strategic or financial advantages to the Aave DAO, it is possible for these terms to be deviated from with governance approval. However, it would be expected that the proposing entity provides a strong argument for why deviation should occur.
A structured framework providing clear guidance for the DAO and applicants on determining whether to proceed with a Friendly Fork or a Whitelabel Instance.
It is important to emphasize that this serves as a guiding framework designed to assist both the DAO and applicants. Each project may be assessed on a case-by-case basis by the DAO if there is a justified reason, whether strategic, financial, legal, or otherwise.
This proposal represents a strategic opportunity for the DAO. By endorsing friendly forks and whitelabel instances, the DAO can capitalize on the established Aave infrastructure and brand recognition without assuming full operational responsibility. This approach allows the DAO to benefit from the potential growth and success of these derivative projects like dedicated RWA (Horizon), Stablecoin focused (WLFI) and other instances or forks while maintaining a streamlined operational focus. If the number of friendly forks and whitelabel instances will decrease due to this proposal, the DAO can create a TEMP CHECK and deploy Aave on its own, capturing 100% or potential profits and securing marketshare. The disadvantages are therefore almost non-existent for the DAO.
I invite all DAO member and SP to give feedback, so this ARFC can be adjusted accordingly.
No onchain actions (AIP) are required for this proposal so if ARFC Snapshot passes this will become canon.
Next Steps
- Publish a standard ARFC and collect community & service provider feedback.
- If the ARFC snapshot passes, this community preference becomes canon and risk service providers incorporate this into current and future recommendations.
Disclaimer
I have not been compensated for the publication of this proposal. I am a holder of Aave & aAave currently.
Copyright
Copyright and related rights waived under Creative Commons Zero (CC0).