The prolonged governance battle that commenced when Aave Labs diverted swap fees from the DAO treasury has come to an end, with the community voting in favor of the proposal. The approved 'Aave Will Win' proposal, deemed the most significant in Aave's history by its founder, establishes a framework that channels 100% of revenue from Aave-branded products back to the DAO, consolidating economic rights under the AAVE token. This shift implies that the DAO will now be responsible for funding Aave Labs' activities, with the approved proposal including a $25 million stablecoin grant and a 5,000 AAVE token allocation to Aave Labs.
The Aave DAO, a decentralized autonomous organization, oversees the Aave lending protocol, enabling token holders to vote on key decisions such as upgrades, fees, and treasury utilization. The 'Aave Will Win' proposal has been passed, outlining a roadmap for the future: Aave will become fully token-centric, with one asset and one model - $AAVE.
The vote resolves a controversy that emerged in December when delegates noted that the integration of CoWSwap into Aave's interface had quietly redirected swap-related fees away from the community treasury. The 'Aave Will Win' proposal decisively resolves this issue in favor of token holders, with protocol revenue now being supplemented by application-layer revenue from Aave Pro, Aave App, Horizon, and Aave Kit. Swaps on Aave.com and Aave Pro are generating an additional $10 to $20 million in revenue beyond existing protocol fees.
The application layer is a key area of focus, with Aave App aiming to provide a 'fintech-like experience' for mainstream users, complete with $1 million account protection per user and a card that will generate fees for the treasury. The proposal takes a firm stance against 'value leakage,' with service providers required to build exclusively for Aave, with no tolerance for relationship gating or products built at the expense of token holders.
Every service provider will have measurable goals, and governance process improvements are planned to minimize 'politics and friction.' Technically, Aave V4's reinvestment feature will convert idle float capital in lending pools into yield-generating positions, creating an additional revenue stream. New 'Spokes' will expand collateral options and address the demand side of DeFi liquidity, with the team also planning to invest in agentic AI infrastructure for developers building on Aave.
With roughly $25 billion in total value locked across multiple chains, Aave is the largest lending protocol in DeFi, generating $140 million in annual revenue. The target is to scale from $40 billion to $1 trillion, positioning Aave as a financial network that any fintech, bank, or asset manager can plug into, rather than a traditional bank.