The prolonged governance battle, which commenced when Aave Labs redirected swap fees away from the DAO treasury, has come to an end with the community voting in favor of the proposal. The Aave governance has approved the 'Aave Will Win' proposal, a framework that reallocates 100% of revenue from all Aave-branded products back to the DAO, consolidating economic rights under the AAVE token. This significant shift implies that the DAO will now be responsible for funding Aave Labs' activities, with the proposal approving a $25 million stablecoin grant and a 5,000 AAVE token allocation to Aave Labs.
The Aave DAO serves as a governance system, managing the Aave lending protocol and enabling token holders to vote on crucial decisions such as upgrades, fees, and treasury utilization. The 'Aave Will Win' proposal has been hailed as a decisive victory for token holders, with protocol revenue being supplemented by application-layer revenue from Aave Pro, Aave App, Horizon, and Aave Kit. The proposal also addresses the issue of 'value leakage' by ensuring that service providers build exclusively for Aave, with measurable goals and a governance process aimed at reducing friction. The technical aspects of the proposal include Aave V4's reinvestment feature, which generates yield-generating positions from idle float capital in lending pools, and the introduction of new 'Spokes' that expand collateral options and address the demand side of DeFi liquidity.
With approximately $25 billion in total value locked across multiple chains, Aave is poised to scale from $40 billion to $1 trillion, positioning itself as a comprehensive financial network.