A conflict has arisen between the community managing the DeFi lending platform Aave and the main developer Aave Labs regarding revenue distribution.
The crux of this dispute is Aave Labs' recent decision to introduce CoW Swap as the trading infrastructure on the protocol's main website. This change has replaced the ParaSwap integration, which previously generated referral fees for the Aave DAO treasury.
DAO, interface update economic impact question
Governance representatives say that this change has cut off a revenue source of about $200,000 per token. They estimate that the annual impact will be around $10 million, describing it as a decision that deprives token holders of value.
Marc Zeller, founder of the Aave Chan Initiative, criticized the decision as 'the covert privatization of brand assets.'
Zeller claims that Aave Labs unilaterally changed economic contracts without the DAO's approval. The DAO manages the underlying smart contracts.
“Aave Labs has redirected the trading volume of Aave users to competitors for its own monetization. This is unacceptable. Through this integration, the Aave protocol has lost two sources of revenue that are not easily replaceable.”
Zeller warned that the lack of communication raises concerns about how future upgrades will be handled.
He specifically pointed out the upcoming V4 upgrade, raising questions about whether other 'additional features' could also be excluded from the DAO.
“It is important to look at the big picture and define whether Aave Labs has violated the fiduciary duty owed to the Aave DAO and AAVE token holders. We also need to discuss what to expect from V4,” Zeller concluded.
Aave Labs, defensive measures
In a detailed response, Aave Labs founder and CEO Stani Kulechov defended the integration, rejecting the characterization of the lost funds as stolen revenue.
Kulechov argued that the fees of the existing Paraswap were not mandatory protocol fees but 'discretionary surpluses.'
“The fee in question was not a policy-driven transition but rather a surplus that we donated to the DAO,” he stated.
He also clearly distinguished between the Aave protocol (a decentralized smart contract managed by the DAO) and the front-end interface, explaining that the front end is a private product managed by Aave Labs.
Kulechov explained that Aave Labs bears the engineering and security costs of the website, adding that the DAO will not support future product development costs.
Therefore, the company claims that it has the right to earn revenue from this front end for the sustainability of the interface.
“It is not a problem for Aave Labs to monetize its products, as long as it does not affect the protocol itself,” he stated.
The developers also reaffirmed Kulechov's position, acknowledging that they failed to effectively communicate the changes.
The company transitioned to CowSwap to provide better trade execution prices and strong protection against MEV (Maximum Extractable Value), stating it was not intended to generate additional revenue.
