# \[ARFC\] The Aave Foundation, Phase 1 **URL:** \ **Category:** Governance\ **Created:** [October 2, 2026, 4:10pm UTC](https://governance.aave.com/t/arfc-the-aave-foundation-phase-1/25756 "2026-10-02T16:10:53Z")\ **Posts on this page:** 2\ **Page:** 1
**Author:** ![AaveLabs](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/aavelabs/32/6388_2.png) [@AaveLabs](https://governance.aave.com/u/AaveLabs)\ **Post date:** [October 2, 2026, 4:10pm UTC](https://governance.aave.com/t/arfc-the-aave-foundation-phase-1/25756/1 "2026-10-02T16:10:53Z")
![Aave Foundation (1)](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/4/4cc306f7123ecd90afa6c60b78ec5e25629bc724.jpeg) # Summary This ARFC seeks to establish the Aave Foundation, a memberless Cayman Islands foundation company created to hold title to the Aave trademark and related intellectual property for the benefit of the Aave Protocol. Formation is the first of several phases. This proposal covers Phase 1 only, which provides for the incorporation of the entity and the appointment of its initial independent director and supervisor. Later phases, covering transfer of the trademark, domains, and codebase IP, and operational scope, will each return to governance with their own scope. This proposal stems from the Aave Will Win Framework commitment to bringing a community-protected vehicle for the brand and IP to governance, reinforcing AAVE as the single asset at the center of the Aave ecosystem. Phase 1 requests funding only for the reasonable costs of incorporation, legal work, and the appointment of the director, supervisor and secretary. Everything else in this document is structure, scope, and the limits placed on that structure. ## Motivation Aave governance has funded various service providers for years, producing code, risk tooling, models, and documentation. Ownership of that output has been handled inconsistently across engagements, and in several cases it sits with whichever provider happened to build it. The Aave trademark and the primary domains sit outside DAO control today as well. A DAO cannot register a trademark, cannot bring an infringement action, and cannot hold title to a domain, so the practical result is that the DAO has paid for assets it cannot defend. A Cayman foundation company solves that problem since it can hold title, execute contracts, and appear in court, while remaining memberless so that no member holds rights over it. DeFi foundations have drawn scrutiny for accumulating discretion over time, usually because they were funded by annual treasury grants and staffed by the same team that proposed them. The design proposed below removes both of those conditions. Forming the entity, transferring registered marks across jurisdictions, and negotiating assignment terms into existing agreements each carry their own legal work and their own costs. A phased approach keeps each request well defined, scoped to work the community can evaluate, and reviewable before the next phase begins. The DAO can stop after any phase and the Foundation will remain a functioning entity with defined governance. ## Specification ### 1. Legal structure The Aave Foundation is incorporated in the Cayman Islands under the Foundation Companies Act as a memberless foundation company whose objects, as stated in its memorandum of association, are limited to holding, protecting and licensing intellectual property for the benefit of the Aave Protocol. The Foundation is managed by an independent director and supervised by an independent supervisor unaffiliated with the director. After the initial appointments, directors are appointed and removed only by AIP. Neither Aave Labs, nor any service provider engaged by the DAO, nor any of their affiliates, holds any right to appoint a director or supervisor, or may be appointed to either role. ### 2. What the Foundation holds The Foundation will take legal title to the Aave trademark, the protocol codebase IP transferred to it, the primary domains, and the intellectual property assigned to it under service provider agreements. As owner, it is responsible for prosecution, maintenance, and defense and enforcement of those assets. Brand licensing is unidirectional. The Foundation licenses the Aave name back for product work so that Aave-branded products can keep shipping, and it charges nothing for that license. The DAO continues to select service providers, set their scope, and approve their compensation through existing governance. Assignment of the resulting code, tooling, models, and documentation to the Foundation becomes a standard condition of those engagements, which gives the DAO one durable owner for accumulated technical work and leaves the Foundation no say over what gets built or who builds it. ### 3. Funding The DAO covers reasonable costs for incorporation, qualified secretary onboarding, legal fees, and the trademark and IP transfer mechanics. No recurring budget is requested, and any future funding needs requires their own governance proposal. ### 4. Authority of the DAO Every listing, parameter change, budget, provider engagement, and framework amendment remains a DAO decision made through existing governance. By AIP, the DAO may appoint and remove directors; holds a consent right over any amendment to the Foundation’s constitution, any disposal of its core IP, and any merger or restructuring; and may direct the Foundation’s winding-up and the transfer of its remaining assets to a successor. ### 5. Reporting The Foundation publishes a quarterly report to the governance forum covering assets held and any change in title, operating expenses, and any legal action taken to defend the trademark or codebase. The first report is published within 90 days of the end of the first full calendar quarter of operation. ## What to Expect The Foundation serves a very explicit purpose as outlined above, while governance maintains every decision about the protocol, exactly as it does today. Listings, parameters, budgets, provider selection, and framework amendments stay with tokenholders, and the Foundation has no vote, veto, or advisory role in any of them. The Foundation has no members or shareholders, and no person holds ownership rights over it. Its board is an independent director, its supervisor is an independent provider unaffiliated with that director, and neither Aave Labs nor any DAO service provider holds a seat or an appointment right. Each phase of its development returns to the forum as a separate proposal with a separate vote, and the community can decline any of them. ## Next steps If community consensus is reached on this ARFC, the proposal moves to Snapshot, followed by an AIP authorizing reasonable incorporation, legal, and director appointment fees. Incorporation in the Cayman Islands follows, along with appointment of the independent director and the supervisor. Transfer of the trademark, the domains, and the codebase IP begins once the entity exists and can hold title. Assignment terms enter new service provider engagements as those engagements come up for renewal or replacement through normal governance. ## FAQ **Does this give Aave Labs control over the protocol?** No, the protocol is governed by the DAO via tokenholders. Additionally, Aave Labs holds no board seat, no supervisor role, and no appointment rights for the Foundation. The Foundation is memberless, so no shareholder sits above the Aave ecosystem in its statute, and the same restrictions apply to every service provider the DAO engages. **What changes about governance?** Nothing. Listings, parameters, budgets, provider engagements, and framework amendments all remain DAO decisions through the existing process. The Foundation holds title to assets and has no discretion over protocol decisions. **Why the Cayman Islands?** A foundation company under the Cayman Foundation Companies Act can exist without members or shareholders while still holding legal title, executing contracts, and appearing in court. That is what makes it possible to own the trademark and defend it without creating an owner who sits above the DAO. **What happens if the DAO wants to unwind the Foundation?** The DAO may, by AIP, replace the directors at any time, or direct the winding-up of the Foundation, and determine the application of its remaining assets, including their transfer to a successor vehicle, subject in each case to the directors’ fiduciary and statutory duties and applicable law. **What IP transfers, and when?** The Aave trademark, the primary domains, and the protocol codebase IP transfer once the entity exists. Intellectual property produced under future service provider engagements is assigned as a standard condition of those agreements. ## Disclaimer This proposal was authored by Aave Labs. Aave Labs holds no governance or economic role in the Foundation described above and does not receive any portion of the setup grant. ## Copyright Copyright and related rights waived under [Creative Commons Zero (CC0)](https://creativecommons.org/publicdomain/zero/1.0/). ---
**Author:** ![k\_ronald](https://avatars.discourse-cdn.com/v4/letter/k/5fc32e/32.png) [@k\_ronald](https://governance.aave.com/u/k_ronald)\ **Post date:** [October 2, 2026, 7:14pm UTC](https://governance.aave.com/t/arfc-the-aave-foundation-phase-1/25756/2 "2026-10-02T19:14:13Z")
## Why Switzerland Should Be Considered Before Incorporating in Cayman I support the objective of creating a legally independent vehicle to hold and protect the Aave trademark, domains and protocol IP. However, before committing to Cayman, I believe governance should compare the proposed structure against a Swiss foundation. The key point is not whether Cayman works. It does. The question is which jurisdiction is better suited for a long-term, ownerless vehicle holding core Aave assets. ### 1. Stronger statutory purpose protection A Swiss foundation has no shareholders or members. Its assets are legally dedicated to the purpose set out in the foundation deed and are subject to independent statutory supervision. For Aave, the foundation purpose could be narrowly defined around holding, protecting and administering the Aave trademark, domains and protocol IP for the benefit of the Aave ecosystem. The supervisory authority provides an additional legal safeguard that those assets continue to be used for that purpose; also in case someone tries to hijack the governance-system by buing up tokens on the market. This is a meaningful distinction from relying primarily on privately drafted constitutional restrictions and appointed corporate service providers. ### 2. AAVE governance can be embedded directly into the structure This is possible in both jurisdictions. Cayman law is flexible enough to give tokenholders direct constitutional governance rights, so Cayman should not be criticised on the basis that every DAO vote is merely advisory. A Swiss foundation can likewise embed AAVE governance into its constitutional architecture. Subject to mandatory Swiss law, tokenholders can be given defined rights regarding matters such as: - appointment and removal of the Foundation Board; - licensing or transfer of core IP; - oversight of the Foundation Board; and - dissolution and the destination of remaining assets. The Swiss advantage is therefore not tokenholder voting itself. It is the combination of DAO governance with a statutory purpose lock and independent supervision. ### 3. IP commercialisation is a key jurisdictional issue This is particularly important because the Foundation is being created specifically to hold IP. The proposed royalty-free licence may mean that Cayman economic-substance requirements are not a material issue initially. But the Foundation is intended to exist for the long term. If Aave later commercialises its IP through licence fees, royalties or other IP income, Cayman’s economic-substance regime can become directly relevant. A Cayman entity conducting IP business may need meaningful Cayman-based substance, including relevant activities, expenditure, presence and personnel. Switzerland does not impose an equivalent Cayman-style economic-substance regime on IP commercialisation. 250718 Jurisdiction Comparison … The jurisdiction should therefore work not only for the Foundation on day one, but also for a future scenario in which Aave decides to monetise its IP. ### 4. Switzerland has a materially stronger treaty network The same applies to international taxation. Switzerland has a network of more than 100 double-taxation treaties, whereas Cayman has a much more limited network of comprehensive tax treaties. 250718 Jurisdiction Comparison … That can become important if the Foundation receives royalties or licence fees from counterparties in different jurisdictions. Depending on the relevant treaty and applicable anti-abuse requirements, treaty access may reduce withholding taxes and provide mechanisms to avoid double taxation. For a long-term IP owner, this is a structural advantage worth considering. ### Suggested next step I would therefore suggest obtaining a short Cayman-versus-Switzerland opinion before incorporation, focused on: 1. integration of AAVE governance; 2. legal protection of the Foundation’s purpose and core IP; 3. treatment of future IP commercialisation and economic-substance requirements; and 4. access to double-taxation treaties for cross-border IP income. Cayman may ultimately remain the preferred jurisdiction. But given that the Foundation is intended to hold some of Aave’s most important assets for the long term, that jurisdictional comparison should be made before the IP is transferred, not afterwards.