dao

#DAO treasuries are some of the most misunderstood entities in crypto. People talk about them as if they’re just giant wallets that should always be “working.” If funds aren’t earning yield, the assumption is that something is wrong. I don’t agree with that, and @Yield Guild Games YGG’s treasury strategy is a good example of why.

Yield Guild Games doesn’t treat DeFi as a casino. When the treasury interacts with DeFi protocols, it does so carefully, with a clear understanding of risk. That alone sets it apart from many DAOs that chased yield during bull markets and paid the price later.

The core question for any treasury shouldn’t be “how much yield can we earn?” It should be “what risks are acceptable for the role this capital plays?” YGG’s treasury isn’t speculative capital it’s ecosystem infrastructure. Losing it would affect scholars, SubDAOs, and long-term sustainability. That mindset changes everything.

When YGG allocates treasury funds into DeFi, it’s typically for strategic reasons: liquidity management, capital efficiency, or ecosystem alignment. Not for headline APYs. This restraint reflects maturity. DeFi yield is attractive until it isn’t and history has shown how fast things can unwind.

Another important aspect is optionality. Treasuries need liquidity. Locking funds into complex strategies for marginal yield often removes flexibility. YGG appears to prioritize being able to respond to market conditions over maximizing short-term returns.

That doesn’t mean DeFi is avoided. It means it’s used selectively. Stable, battle-tested protocols are favored over experimental ones. Risk is assessed not just technically, but systemically. What happens if liquidity dries up? What happens if markets move fast? Those questions matter more than yield percentages.

I also think transparency plays a huge role here. Treasury interactions with DeFi are visible on-chain. That creates accountability. Decisions aren’t hidden they are open to governance scrutiny. If a strategy fails, the community can see it and adjust.

This is where DeFi and governance intersect. Treasury strategy isn’t just a financial decision it’s a collective one. YGG’s structure allows contributors to question, propose, and refine how capital is deployed. That reduces blind risk-taking.

There’s also an educational effect. By demonstrating cautious DeFi usage, YGG sets a standard for SubDAOs and regional treasuries. Risk management becomes cultural, not just technical.

In bear markets, this approach pays off. DAOs that overextended into DeFi often found themselves illiquid or exposed when markets turned. YGG’s treasury retained resilience. That doesn’t make headlines, but it keeps systems alive.

Another misconception is that cautious treasuries are unproductive. In reality, capital preservation is productivity when the goal is longevity. Not every dollar needs to be optimized. Some capital exists to provide stability, not returns.

What I find compelling is how YGG integrates DeFi without letting it dominate the narrative. DeFi supports the ecosystem it doesn’t define it. Gaming, governance, and community remain the core focus.

This balance is rare. Many projects become DeFi projects by accident, chasing yield because it’s easier than building real value. YGG avoided that trap.

In the long term, treasuries that survive won’t be the ones with the highest historical APY. They will be the ones that managed risk responsibly while continuing to fund growth. YGG’s treasury strategy won’t excite speculators, and that’s a good thing. It’s designed for contributors, not traders.

If DAOs are meant to be long-lived institutions, their treasuries need to act like it. YGG’s interaction with DeFi suggests an understanding of that responsibility and in crypto, that’s still rare.
@Yield Guild Games
#YGGPlay
$YGG

A dispute over revenue sharing has erupted between the community governing DeFi lender Aave and its primary development firm, Aave Labs.
The conflict centers on Aave Labs’ recent decision to integrate CoW Swap as the underlying infrastructure for trading on the protocol’s primary website. The switch replaced ParaSwap, a previous integration that generated referral fees for the Aave DAO treasury.
DAO Members Question Economic Fallout From Interface Update
Governance delegates say the change has cut off a revenue stream of about $200,000 per week. On an annualized basis, they estimate the impact at roughly $10 million, shifting value away from token holders.
Marc Zeller, founder of the Aave Chan Initiative, criticized the move, calling it a “stealth privatization” of brand assets.
Zeller argued that Aave Labs unilaterally altered the economic arrangement without seeking approval from the DAO, which governs the underlying smart contracts.
“Aave Labs, in the pursuit of their own monetization, redirected Aave user volume towards competition. This is unacceptable. By doing this integration, the Aave protocol lost two revenue streams that cannot be easily replaced,” he wrote.
Zeller warned that the lack of communication raises concerns about how future upgrades will be handled.
He pointed specifically to the upcoming V4 upgrade and questioned whether other “accessory features” could also be ring-fenced from the DAO.
“It is important to consider the picture as a whole to define if Aave Labs breached its expected fiduciary duty towards the Aave DAO and the AAVE token holders, and what we should expect from V4 in general,” Zeller concluded
Aave Labs Defend Moves
In a detailed response, Stani Kulechov, founder and CEO of Aave Labs, defended the integration, rejecting the characterization of the lost funds as stolen revenue.
Kulechov argued that the previous fees from ParaSwap were a “discretionary surplus” rather than a mandated protocol fee.
“It was never a fee switch, its been a surplus that we donated to the DAO,” he stated.
He also drew a sharp line between the Aave protocol, the DAO-governed decentralized smart contracts, and the front-end interface. He described the interface as a private product funded and maintained by Aave Labs.
Kulechov said Aave Labs bears the costs of engineering and security for the website. He added that the DAO does not subsidize ongoing product development expenses.
Consequently, the firm asserts the right to monetize the interface to ensure its sustainability.
“It’s also perfectly fine for Aave Labs to monetize its products, especially as they don’t touch the protocol itself,” he said.
The development firm also restated Kulechov’s position, acknowledging a failure to communicate the change effectively.
The firm said it switched to CoW Swap to deliver better execution prices and stronger protection against MEV (maximum extractable value), rather than to generate additional revenue.
#DAO

A governance conflict has emerged within the Aave ecosystem, pitting the community led Aave DAO against its primary development firm, Aave Labs, over a disputed revenue stream worth an estimated $10 million annually.
The disagreement follows Aave Labs’ decision to replace ParaSwap with CoW Swap as the default trading infrastructure on Aave’s main web interface — a move that has sparked concerns around transparency, revenue rights, and governance boundaries.
🔄 Interface Change Sparks Revenue Concerns
Previously, ParaSwap generated referral fees that flowed into the Aave DAO treasury. Governance delegates claim the transition to CoW Swap effectively cut off this income stream, estimated at around $200,000 per week.
On a yearly basis, DAO members calculate the lost revenue at roughly $10 million, arguing that the change shifts economic value away from AAVE token holders and toward private entities.
🏛️ Governance Voices Push Back
Marc Zeller, founder of the Aave Chan Initiative, publicly criticized the move, labeling it a form of “stealth privatization” of Aave’s brand and ecosystem.
Zeller argued that Aave Labs made a unilateral decision without seeking approval from the DAO, despite the DAO governing the protocol’s smart contracts and economic design.
“Aave Labs, in the pursuit of their own monetization, redirected Aave user volume toward competitors. This is unacceptable,” Zeller stated.
“By making this integration, the Aave protocol lost two revenue streams that cannot be easily replaced.”
He also warned that the lack of communication raises broader governance concerns — particularly as the protocol approaches the Aave V4 upgrade.
“We must assess whether Aave Labs breached its fiduciary expectations toward the DAO and AAVE holders, and what this means for V4 and future upgrades,” he added. ⚠️
🛠️ Aave Labs Responds to Allegations
In response, Stani Kulechov, founder and CEO of Aave Labs, rejected claims that DAO funds were diverted or “stolen.”
Kulechov stated that the fees generated through ParaSwap were never a formal protocol fee.
“It was never a fee switch. It was a discretionary surplus that Aave Labs voluntarily donated to the DAO,” he explained.
He emphasized the distinction between the Aave protocol, which is DAO-governed and fully decentralized, and the front-end interface, which he described as a private product built, funded, and maintained by Aave Labs.
According to Kulechov, Aave Labs bears all development, infrastructure, and security costs for the interface, without DAO subsidies — giving the firm the right to monetize it if needed.
“It’s reasonable for Aave Labs to monetize its products, especially when they don’t affect the protocol itself,” he said.
🔐 Product Rationale Behind the Change
Aave Labs acknowledged that communication around the update could have been clearer. However, the firm stressed that the decision to integrate CoW Swap was driven by product quality, not revenue motives.
The firm cited better trade execution, improved MEV protection, and enhanced user experience as the primary reasons for the switch. 📈
🔍 What This Means Going Forward
The dispute highlights growing tensions in DeFi around ownership, governance authority, and monetization rights between DAOs and their core contributors.
As Aave prepares for its V4 upgrade, the outcome of this debate may shape how future interface features, revenue streams, and governance responsibilities are defined not only for Aave, but for DeFi protocols more broadly.
#DeFiGovernance #CryptoNews #Web3 #DAO #AVA