After 990,000 opposition votes, Aave announces distribution of non-protocol revenue to token holders

Aave Labs plans to distribute non-protocol revenue to token holders and address intellectual property issues following the governance voting controversy. Behind this proposal is the community’s strong skepticism about revenue distribution rights. According to the latest news, Aave Labs will promote this reform in an upcoming proposal, attempting to ease recent governance disputes.

Background: From Revenue Transfer to Proposal Reform

The Starting Point of the Controversy

In early December, Aave Labs quietly adjusted the frontend trading path, switching the default trading counterparty from ParaSwap to CoW Swap. This seemingly technical change actually altered the flow of fees: the related revenue no longer entered the Aave DAO treasury but flowed to an address controlled by Labs.

Community representative EzR3aL estimated that this change means over $10 million annually is transferred from the community to the team. More importantly, this decision was made without prior communication or disclosure.

Warning from Voting Results

When the community questioned this, Aave Labs responded directly and frankly: the frontend interface and its associated functions are essentially team products, and the related revenue is company property, not assets to be controlled by the DAO.

This stance immediately triggered a governance vote. According to the latest data, the voting results show a clear opposition:

The opposition votes overwhelmingly passed, but what is more noteworthy is the 41% abstention—this reflects the “power plant” phenomenon in DeFi governance: many token holders hold tokens but do not participate in governance.

Significance of the New Proposal

Core Content

Aave Labs plans to introduce a new proposal involving two key issues:

• Non-protocol revenue distribution: Distributing revenue from frontend, trading routing, and other non-core protocol activities to token holders, changing the previous unilateral control by the team
• Intellectual property issues: Clearly defining ownership and usage rights of Aave brand assets, code, technology, and other intellectual property to reduce future disputes

Personal Viewpoint

This proposal is somewhat a compromise and adjustment. It acknowledges the community’s reasonable demands while attempting to establish clearer boundaries—distinguishing which revenues belong to the DAO and which belong to the team. But it also exposes a deeper problem: DeFi governance still lacks a clear framework for power distribution.

Industry Insights

Challenges of Governance Mechanisms

This incident with Aave reflects several common issues:

• The contradiction between decentralization and actual control: although governed in name by the DAO, the core team’s control over frontend, technology, and other key assets gives them substantial power
• Low participation: a 41% abstention rate indicates many token holders lack enthusiasm for governance topics
• Information asymmetry: major decisions are made without prior communication, leading to community dissatisfaction

Possible Future Developments

If the new proposal proceeds smoothly, it could serve as a reference for other DeFi projects—establishing more transparent revenue distribution mechanisms and clarifying intellectual property ownership. But this also requires project teams to find a better balance between commercial interests and community governance.

Summary

The revenue distribution controversy of Aave essentially reflects a common problem in the growth of DeFi projects: how to maintain the team’s commercial incentives while satisfying the community’s governance participation needs. The introduction of the new proposal is a positive signal, indicating Aave Labs is willing to make adjustments on this issue. But the real test lies in whether this proposal can truly address governance trust issues and how other projects might learn from it. For the DeFi ecosystem, the lesson from this event is: transparency and proactive communication are often more important than post-hoc remedies.