The protracted 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 'Aave Will Win' proposal, deemed the most significant in Aave's history by its founder, 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 decentralized autonomous organization, oversees the Aave lending protocol, enabling token holders to vote on decisions such as upgrades, fees, and treasury utilization.
The 'Aave Will Win' proposal has resolved a dispute that arose in December when delegates noticed that the integration of CoWSwap into Aave's interface had discreetly redirected swap-related fees away from the community treasury. This controversy exposed deeper tensions regarding control over the protocol's most valuable assets.
The approved 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 aiming to provide a 'fintech-like experience' for mainstream users, complete with $1 million account protection per user and a card that generates fees for the treasury. The proposal takes a firm stance against 'value leakage,' with service providers required to build exclusively for Aave and adhere to measurable goals. Governance process improvements are planned to reduce friction, while technical advancements, such as Aave V4's reinvestment feature and 'Spokes,' aim to expand collateral options and address DeFi liquidity demands.
With roughly $25 billion in total value locked, Aave is the largest lending protocol in DeFi, and the approved proposal positions it for further growth and scalability.