Aave Labs Proposes Revenue Sharing to Bridge Governance Divide

Aave founder Stani Kulechov has announced that Aave Labs will share future revenue from business activities outside the core Aave protocol with AAVE token holders. The plan, which follows a failed governance proposal to fully integrate the company into the Aave DAO, represents a strategic shift in how the DeFi protocol captures and distributes value. This move aims to address tensions between the development team and token holders over control and revenue sharing.

The previous proposal, known as AIP 2025-01, sought to transfer Aave Labs’ intellectual property and equity to the Aave DAO. However, it failed to gain enough support due to concerns over operational inefficiency and the loss of agility for the core team. This outcome highlighted ongoing disagreements about the appropriate relationship between the development team and the decentralized governance model according to reports.

Kulechov’s new proposal involves distributing a portion of revenue from off-protocol ventures such as real-world asset tokenization, institutional lending, and consumer finance. This model shifts the AAVE token’s utility from pure governance to a hybrid structure that includes revenue sharing. The founder emphasized that this approach allows Aave Labs to remain agile while ensuring token holders share in the growth of new initiatives.

Why the Move Happened

The failed AIP 2025-01 vote revealed significant governance tensions. Critics argued that transferring control of Aave Labs to the DAO could slow decision-making and reduce innovation. Kulechov’s own token purchase before the vote also sparked debate, with some viewing it as centralizing influence. The new model aims to address these concerns by balancing decentralization with the need for a flexible development team.

Aave’s growth strategy now includes expanding beyond traditional DeFi lending into high-potential areas like RWA. The protocol’s modular architecture in Aave V4 supports new use cases, such as RWA-backed loans and custodian integrations. This diversification is seen as essential for capturing a larger share of the global financial market.

How Markets Responded

The announcement coincided with a record high in ETH deposits on Aave, reaching 3.8 million ETH as of January 2026. Token Terminal reported that Aave’s TVL has hit $35 billion, with the majority on the Ethereum mainnet. This suggests growing confidence in the protocol’s stability and long-term vision according to market analysis.

Analysts from institutions like CoinShares and Delphi Digital have noted that governance participation in major DAOs remains low. The new revenue-sharing model could incentivize broader participation by providing token holders with tangible value beyond governance rights. This may also make the AAVE token more attractive to investors focused on cash flow and yield according to industry experts.

What Analysts Are Watching

Experts are closely monitoring how Aave Labs defines and reports “non-protocol revenue.” Token holders will need clear and transparent accounting to trust the system. Additionally, legal and regulatory questions remain about whether the new model could reclassify AAVE as a security. These issues will need to be addressed in the formal governance proposal according to analysts.

The success of Aave’s model will depend on the execution of its new business ventures without diverting resources from core protocol development. If Aave Labs can scale RWA and institutional lending initiatives while maintaining the strength of its lending markets, it could set a precedent for other DeFi protocols. However, any missteps in managing these new ventures could undermine investor confidence according to market forecasts.

The broader DeFi community will also watch how this model influences similar projects like Compound Labs or the Uniswap Foundation. These protocols may face increasing pressure to explore revenue-sharing arrangements as they seek to balance decentralization with growth. The outcome of Aave’s proposal could shape the future of value distribution in DeFi according to industry observers.