A DeFi Civil War? Aave Founder Clashes with DAO Over Millions in Revenue
Forget your boring governance proposals. Last week, the Aave community watched a full-blown cage match unfold, pitting founder Stani Kulechov and his company, Aave Labs, against the very DAO designed to govern the protocol. At stake? Millions in revenue and the true meaning of “decentralization.”
It was a stunning display of disunity, with accusations flying that Aave Labs attempted to “privatise” a revenue stream that, until recently, flowed directly into the DAO’s coffers. This isn’t just some internal squabble; it cuts right to the heart of how decentralized protocols operate, who truly benefits, and what power token holders actually wield.
The $10 Million Bone of Contention
The drama kicked off on December 11th. Ezr3al, a pseudonymous but highly influential delegate (and the DAO’s largest), dropped a bombshell in the Aave forum. The target? A recent announcement from Aave Labs about a new partnership with CoWSwap to “improve” the swap experience on Aave’s interface.
Sounds benign, right? Wrong. The interface — that user-friendly website where non-technical folks interact with Aave — already had revenue-generating swap tech. That revenue, from a provider formerly known as Paraswap (now Velora), went straight to the DAO. We’re talking about an estimated $1.1 million for the DAO in 2025.
Here’s the kicker: The new CoWSwap-generated revenue was slated to go to Aave Labs. And it wasn’t just a little extra cash. According to Ezr3al, the CoWSwap replacement was pulling in a staggering $10 million annually. Ten million. Suddenly, a seemingly minor interface upgrade looked a lot like a major cash grab, siphoning off a significant profit that, in the community’s eyes, belonged to them. Ezr3al minced no words, calling it an “unacceptable attempt to profit off the Aave brand,” especially after the DAO itself funded a major visual overhaul this year.
Labs’ Defense: “We Own the Interface”
Aave Labs wasn’t about to take this lying down. They rushed to the forums with their defense. Their argument? While the AAVE token holders control the DAO, and the DAO controls the protocol, Aave Labs still owns and controls the *interface*. This isn’t a trivial distinction; it’s where the lines of ownership get blurry in the messy world of Web3.
Running that interface costs money, they argued. Collecting a fee on swaps, a feature that exists purely at the interface level and not on the core protocol, was a perfectly “reasonable way to defray those costs.” And if the DAO was so bothered, Aave Labs helpfully pointed out, it was “free to create a DAO-run interface if that direction is ever desired.” A convenient out, or a cold dose of reality?
The Community Fires Back: Fiduciary Duty and Tacit Agreements
Then, Marc Zeller entered the fray. Zeller, founder of the Aave Chan Initiative and a known bare-knuckles debater, didn’t pull any punches. He contended that Aave Labs, like any other “service provider” hired by the DAO, had a fiduciary duty to the cooperative. That’s a legal-sounding term for a moral and legal obligation to act in the best interest of another party. In this case, the DAO.
Zeller went further, suggesting a “tacit agreement” had always existed: the DAO allowed Aave Labs to use the valuable Aave brand, and in return, interface revenue was directed back to the DAO. “It seems we have been fooled in considering this a natural alignment, and we acknowledge the new reality,” he wrote, a scathing indictment of trust broken.
Kulechov, ever the pragmatist, dismissed the idea of a fiduciary duty as “nonsense.” He claimed the original revenue stream was only ever “donated” to the DAO due to “regulatory uncertainty,” not out of any obligation. This highlights a persistent tension in crypto: the difference between a gesture of goodwill and a binding commitment, especially when millions are involved.
What Does “Decentralized” Really Mean?
This entire saga perfectly encapsulates the growing pains of decentralization. Projects start centralized, often with a core team building the initial protocol and brand. Then, the grand vision of decentralization pushes them to hand over control to a DAO. But what exactly gets handed over? The core code? The brand? The associated revenue streams? The “why” here is crucial: if the founding team can just claim any lucrative revenue generated by an associated front-end, it raises serious questions about the true power of the DAO and the ownership stakes of token holders.
This isn’t just Aave’s problem; it’s a foundational challenge for many crypto projects trying to transition from a corporate structure to a community-governed one. Where does the “company” end and the “community” begin? Who funds what, and who profits?
The Poison Pill and the Search for Clarity
The furor has spurred at least three proposals in the Aave DAO forum. One suggests the DAO just buy a competitor, Spark. Another, the aptly named “poison pill,” goes for the jugular: suing Aave Labs for “full ownership of all code, intellectual property, and brand,” 100% of Labs’ equity, and all past revenue from Aave-branded products. A third, perhaps more realistically, simply asks the DAO to take control of Aave’s social media accounts and other brand assets.
While the “poison pill” might be a long shot, these proposals underscore the depth of the community’s frustration. They’re not just arguing over money; they’re arguing over identity and control. Marc Zeller summed it up perfectly on X: “When you own $AAVE, what do you actually own? The next few weeks will bring definitive clarity to this strategic question.”
And that, dear readers, is the billion-dollar question for every token holder in every “decentralized” protocol out there. The Aave clash isn’t just about Aave; it’s a spotlight on the inherent contradictions and power struggles at the heart of Web3 governance. Watch this space – the answers could reshape how we view token ownership and DAO power across the entire DeFi ecosystem.
