Since December, the DeFi sector’s largest protocol has been grappling with an existential question, pitting Aave Labs against the DAO: who owns Aave?
What started as a discussion about swap fees quickly escalated into an existential debate about ownership of the Aave brand, as well as the rights to monetize it.
Yesterday, Aave Labs published a “temperature check” titled “Aave Will Win Framework” on the Aave governance forum.
Their headline reads: “100% of product proceeds go to the Aave DAO,” but the message, which is almost 4,000 words, doesn’t stop there.
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At a high level, the post proposes that all of Aave’s product revenue will go to the DAO. A foundation would also be established to “take responsibility for maintaining and managing” the Aave brand.
This addresses DAO concerns about Labs’ potential brand takeover of products including its front-end, Aave’s app, card and institution-focused Horizon market.
These concessions come with a funding request for significant amounts, namely $25 million in stablecoins and 75,000 $AAVE.
Further grants totaling $17.5 would be “affordable on specific product launches.”
The first payment of stablecoins would be partially upfront ($5 million), while the rest would be streamed the following year. $AAVE tokens would be unlocked linearly over a two-year period.
It clarifies “all funds will be spent on Aave-related efforts” such as “user acquisition, marketing and ongoing development.”
Correct destination, but the route ‘needs work’
While DAO proponents generally view the proposal as positive, concerns remain over revenue calculations. That, and the huge sum of requested tokens, both stables and $AAVE.
Vocal DAO delegate Marc Zeller reacted harshly at first, calling Labs’ proposal “extractive” and a “gaslight.” He sees it as “raiding” DAO tokens “for zero actually enforceable obligations.”
A longer follow-up post was more positive, recognizing the “win” for the DAO while also acknowledging that the move is essentially “four proposals in a trench coat.”
However, Zeller cautions that when calculating earnings, “deductions are at the sole discretion of Aave Labs. No independent audit. No cap. No DAO approval threshold.”
He also underlines that the requested tokens worth $50 million “represent 31.5% of the entire treasury. For a single service provider. In a single vote.”
Furthermore, the extra 75,000 $AAVE tokens would further increase Labs’ dominance in DAO voting.
$AAVE voting rights
Aave Labs isn’t shy about flexing its muscles during sensitive moods.
In what was labeled an “outrageous” move, Labs sparked a surprise vote over employee Ernesto Boado’s proposal over the Christmas holidays.
The proposal was voted down with 55% against, while the majority of DAO delegates abstained.
Furthermore, Zeller suspects that today’s narrowly defeated vote on “mandatory disclosures” was ironically heavily influenced by undisclosed Lab-linked portfolios.
Splitting another 75,000 tokens would only increase Labs’ ability to influence future votes in its favor.