Aave Labs yields to token holder pressure: DeFi giant plans to implement revenue sharing mechanism

Source: Yellow Original Title: Aave Labs yields to pressure: DeFi giant plans to share revenue after token holder revolt

Original Link: Aave Labs announced on Friday plans to share revenue generated outside the core protocol with AAVE token holders and to formally address intellectual property issues in an upcoming proposal. This move aims to quell growing controversy over value capture and governance alignment.

At the time of the announcement, the Aave community had been engaged in weeks of discussion, focusing on whether commercial products developed by Aave Labs—particularly those targeting real-world assets and institutional users—are extracting value from the ecosystem without adequately rewarding token holders.

Stani Kulechov, founder of Aave, stated that the protocol has reached a “crossroads,” warning that optimizing solely for local crypto lending could limit long-term growth, while well-capitalized traditional financial players are accelerating their push into blockchain-based markets.

Factors Triggering the Controversy

The expansion of Aave Labs from traditional DeFi lending into real-world assets and consumer-facing applications has intensified controversy.

While these initiatives aim to attract institutional capital and new users into the ecosystem, critics within the DAO have raised concerns about governance, branding, and revenue distribution.

The debate centers on whether the application-layer products developed by Aave Labs can operate under the Aave name and charge their own fees without a clear mechanism to return value to AAVE token holders.

Some community members argue that this could weaken the economic role of the token, even as the broader ecosystem grows.

The issue also involves intellectual property rights, with representatives seeking clarity on who controls branding and technology when products are built by commercial entities rather than the DAO directly.

Proposed Revenue Sharing and Intellectual Property Protections

In response, Aave Labs indicated it would propose a structure to share protocol outside revenue with token holders, marking a shift toward closer alignment between developers and the DAO.

While details have not yet been disclosed, Kulechov said that such alignment is crucial if Aave wants to expand beyond current crypto-centric use cases.

The proposal is also expected to include measures to protect branding and intellectual property, addressing concerns that the Aave name could be diluted or commercialized without sufficient oversight by token holders.

Aave Labs emphasized that it does not believe the DAO should directly fund or operate consumer products, citing the capital intensity, regulatory complexity, and speed required to compete with traditional financial platforms.

Instead, the protocol will remain open and permissionless, with independent teams building products that drive usage and return revenue to the core infrastructure.