Aave DAO Approves $25M Grant and Formalizes Revenue Control Under New Framework

The Aave decentralized autonomous organization approved a proposal to restructure funding and revenue control on April 12, 2026. The vote passed with nearly 75% support, establishing a new framework called Aave Will Win. This decision grants Aave Labs $25 million in stablecoins and 75,000 AAVE tokens to accelerate development of Aave V4. The framework mandates that 100% of protocol and product revenue flow directly to the DAO treasury. This move resolves prior disputes regarding the retention of brand-adjacent revenue by the development team. According to the report.

The approved grant includes $25 million in aEthLidoGHO stablecoins distributed over 12 months. The token allocation vests linearly over a four-year period. Aave founder Stani Kulechov described the proposal as the most significant in the protocol's history. He noted that token holders now own the economic rights, brand, and integrations. The framework ratifies Aave V4 as the long-term technical foundation for the protocol. As reported.

Under the new model, revenue from products such as Aave Pro will no longer be retained by Aave Labs. The team will limit its focus to Aave-related products to reduce operational scope. A late-2025 dispute over redirecting swap fees away from the treasury triggered the urgency for this governance change. The DAO intends to use the consolidated revenue to target $1 trillion in Total Value Locked. According to the analysis.

Why Did Chaos Labs Exit As Risk Manager?

Chaos Labs announced its departure as Aave's primary risk manager citing a compensation dispute. The firm exited due to unprofitability, contributor attrition, and disagreements over risk methodology. Chaos Labs managed collateral factors, liquidation thresholds, and interest rate models for Aave V2 and V3 markets. These functions now lack an assigned owner during the critical migration to Aave V4. According to the report.

Aave Labs proposed raising the budget for Chaos Labs to $5 million annually. This amount represented roughly 3.5% of Aave's $142 million in 2025 revenue. Chaos Labs deemed this insufficient given three years of operating losses and the expanded workload. Banks typically allocate 6% to 10% of revenue to risk and compliance functions. As detailed.

The exit of Chaos Labs follows the departure of BGD Labs and the winding down of the Aave Chan Initiative. These three major contributors handled technical verification, growth, and risk respectively. Their departures compress the remaining institutional knowledge base inside the DAO. A configuration error in March involving a CAPO oracle misconfiguration triggered approximately $10.9 million in liquidations. According to the analysis.

How Will Aave Address Operational Gaps?

Aave Labs is moving to absorb the operational gaps left by the departing contributors. The team proposes taking on governance tooling, DAO GitHub maintenance, and CAPO pricing management. The consolidation argument suggests the protocol should not depend on any single external shop. If Aave Labs can replicate the operational density of the old federated model, it may retain its lending share. As reported.

Chaos Labs argued that the V4 migration increases the surface area for errors and that the historical risk budget is insufficient. Aave V4 introduces a hub-and-spoke liquidity architecture requiring entirely new infrastructure. Managing the live overlap between V3 and V4 versions requires materially more risk tooling. The protocol faces a test of execution during this transition period. According to the article.

The framework targets added revenue streams of $10 million to $20 million annually from new products. These products include the Aave App, Aave Pro, and the Horizon vehicle for real-world assets. Aave V4 sits at the center of the technical roadmap with modular architecture and GHO stablecoin integrations. The stablecoin disbursement breaks down into $5 million available immediately and the remainder streamed over 12 months. As stated.

What Are The Regulatory Implications For Stablecoins?

The European Banking Authority and the European Securities and Markets Authority published draft rules for stablecoin issuers. These Regulatory Technical Standards standardize how issuers handle complaints under the MiCA framework. The guidelines establish protocols for the efficient resolution of complaints by Asset Reference Token holders. According to the report.

The framework seeks to support innovation while ensuring a high level of protection for retail investors. The draft standards are scheduled for submission to the European Commission for approval by the end of June. This regulatory push follows the collapse of Terra's UST, which highlighted systemic risks in the sector. MiCA legislation also mandates rigorous screening of shareholders and board members for crypto asset service providers. As detailed.

The Aave DAO now seeks to leverage its new governance alignment to build a multi-year growth journey. The AAVE token portion of the grant carries no voting rights during the vesting period. Any unspent funds from the stablecoin allocation will return to the treasury. The DAO aims to use these resources to expand into consumer apps and institutional finance. According to the report.