The prolonged governance battle that commenced when Aave Labs diverted swap fees away from the DAO treasury has come to a close, with the community voting in favor of a proposal that redirects all revenue from Aave-branded products back to the DAO, consolidating economic rights under the AAVE token. This move signifies a significant shift, as the DAO will now be responsible for funding Aave Labs' activities, with a $25 million stablecoin grant and 5,000 AAVE token allocation approved. The Aave DAO, a community-run decision-making body, oversees the Aave lending protocol, enabling token holders to vote on key decisions. The 'Aave Will Win' proposal, deemed the most crucial in Aave's history, has been passed with overwhelming support, outlining a roadmap for the future: Aave will become fully token-centric, with a single asset and model.
The proposal resolves a controversy that emerged in December when delegates discovered that the integration of CoWSwap into Aave's interface had quietly shifted swap-related fees away from the community treasury. This dispute exposed underlying tensions over control of the protocol's most valuable assets.
The 'Aave Will Win' proposal decisively favors token holders, with protocol revenue now 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. The application layer is a key area of focus, with Aave App targeting mainstream users with a 'fintech-like experience' and a card launch 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.
Every service provider will have measurable goals, and governance process improvements are planned to reduce friction. Technically, Aave V4's reinvestment feature will turn idle float capital in lending pools into yield-generating positions, creating an additional revenue stream. New 'Spokes' will expand collateral options and address DeFi liquidity demand. The team plans to invest in agentic AI infrastructure for developers building on Aave.
With roughly $25 billion in total value locked, 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.