ava

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.
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