A revenue sharing dispute has erupted between the community managing the DeFi lending protocol Aave and its main development company Aave Labs.
At the center of the tension is Aave Labs' decision to integrate CoW Swap as the transaction infrastructure on the protocol's main website. With this change, the previous integration providing a referral fee contributing to the Aave DAO treasury was abandoned in favor of ParaSwap.
DAO Members Question the Economic Implications of the Interface Update
Management delegates stated that this change would result in an approximate weekly revenue loss of $200,000. When annualized, the impact could be around $10 million, and it was noted that this loss would directly affect token holders.
Marc Zeller, founder of the Aave Chan Initiative, reacted to this step by stating that it means the 'covert privatization' of brand assets.
Zeller claimed that Aave Labs unilaterally changed the economic structure without approval from the DAO. As is known, the DAO is the main community that governs Aave's smart contracts.
'Aave Labs redirected Aave user volume to competitors to maximize its own profits. This is unacceptable. With this integration, the Aave protocol lost two significant revenue streams, and suitable replacements are not easily found,' he said.
Zeller pointed out that the lack of communication could lead to issues regarding future updates.
Specifically referencing the upcoming V4 update, Zeller stated that there are questions about whether other 'side features' will be excluded from the DAO's access.
Zeller said, 'To correctly understand whether Aave Labs violated the expected responsibility towards the Aave DAO and AAVE token holders, and what we should generally expect from V4, it is necessary to look at the whole picture.'
Defense Against Moves from Aave Labs
Aave Labs' founder and CEO Stani Kulechov responded with a detailed explanation, defending the change and rejecting the portrayal of lost revenues as 'stolen.'
Kulechov argued that the previous revenues obtained from ParaSwap were not a mandatory protocol income, but 'optional additional income.'
He stated, 'This was never a fee key; it was the extra revenue we donated to the DAO.'
He also emphasized the need to distinguish between decentralized smart contracts and the Aave protocol and front-end interface managed by the DAO. He stated that the interface is a private product developed and funded by Aave Labs.
Kulechov added that Aave Labs took on the burden of engineering and security costs related to the site. He also reminded that the DAO does not continuously cover product development costs.
As a result, the company asserts that they have the right to generate revenue to make the interface sustainable.
'It is quite natural for Aave Labs to transform the products it has developed into a source of income, especially since there has been no interference with the protocol itself...' he stated.
The development company also acknowledged, reiterating Kulechov's position, that the change had not been adequately shared with the community.
According to the statement, the executives in the company noted that the reason for the transition to CoW Swap was not additional revenue, but rather to provide more advantageous transaction prices and stronger protection against maximum extractable value (MEV).
