The prolonged governance battle that began 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 'Aave Will Win' proposal, deemed the most significant in Aave's history, has been approved, establishing a framework that channels 100% of revenue from all Aave-branded products back to the DAO and consolidates economic rights under the AAVE token. This shift assigns the DAO responsibility for funding Aave Labs' activities, with the approved proposal including a $25 million stablecoin grant and 5,000 AAVE token allocation to Aave Labs.
The Aave DAO, a governance system managing the Aave lending protocol, enables token holders to vote on key decisions. The 'Aave Will Win' proposal resolves a dispute that surfaced in December when delegates noticed that the integration of CoWSwap into Aave's interface had quietly shifted swap-related fees away from the community treasury. The proposal decisively favors token holders, with protocol revenue now supplemented by application-layer revenue from Aave Pro, Aave App, Horizon, and Aave Kit. The application layer is a key area of focus, with Aave App targeting mainstream users and generating fees for the treasury.
The proposal also addresses 'value leakage' by requiring service providers to build exclusively for Aave, with measurable goals and planned governance process improvements. Technically, Aave V4's reinvestment feature and new 'Spokes' expand collateral options and address DeFi liquidity demand. With roughly $25 billion in total value locked, Aave aims to scale from $40 billion to $1 trillion, positioning itself as a financial network for fintech, banks, and asset managers.