The protracted governance dispute that commenced when Aave Labs diverted swap fees away 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 passed, establishing a framework that redirects all revenue from Aave-branded products back to the DAO and consolidates economic rights under the AAVE token.
This development signifies 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 resolved 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 a deeper tension regarding whether Aave Labs or the DAO controlled the protocol's most valuable assets.
The 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. 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 also 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 'politics and friction.' From a technical perspective, Aave V4's reinvestment feature will convert idle float capital in lending pools into yield-generating positions, creating an additional revenue stream.
The introduction of new 'Spokes' will expand collateral options and address the demand side of DeFi liquidity, while the team also plans to invest in agentic AI infrastructure for developers building on Aave. With approximately $25 billion in total value locked across multiple chains, Aave is the largest lending protocol in DeFi, generating $140 million in annual revenue. The stated target is to scale from $40 billion to $1 trillion, positioning Aave as a comprehensive financial network that any fintech, bank, or asset manager can integrate with.