AAVE Proposes Revenue Sharing to Resolve DAO Governance Tensions

• Aave Labs and Aave DAO clashed over control of brand assets and revenue from swap fees, leading to a failed governance vote. According to reports
• The dispute caused AAVE's price to drop 25% in six days despite the protocol's strong fundamentals. Research indicates
• Aave Labs has proposed sharing off-protocol revenue with token holders to resolve tensions. As reported
• The upcoming governance vote will address brand ownership and revenue-sharing terms. According to analysis

Aave (AAVE) faces internal turmoil after a governance dispute between its development team and token holders led to a sharp price decline. The conflict centered on control of brand assets and revenue from front-end swap fees, resulting in a controversial vote that failed to resolve the issues. According to reports Now, Aave Labs has proposed a revenue-sharing plan to align incentives and avoid further value erosion. As detailed Market reaction to the proposal saw AAVE jump 10%, though the token remains down significantly from pre-dispute levels. According to market data

Why Did AAVE Token Prices Drop 25% in December 2025?

Tensions erupted when Aave Labs redirected swap fees from CoW Swap integration away from the DAO treasury. This followed the SEC closing its investigation into Aave without enforcement action in December 2025. According to reports DAO members accused the development team of "stealth privatization," arguing that interfaces were built with community resources. As reported A rushed governance vote to transfer brand assets to the DAO failed with 55% opposition and 41% abstention. According to reports

The market reaction was severe. AAVE sank 25% in six days amid governance uncertainty. According to reports Despite $720 million in annualized protocol revenue and rising TVL, token price pressure intensified. According to analysis VanEck analysts noted the drop highlighted structural misalignment between tokenholder governance and economic value capture. According to reports Founder Stani Kulechov attempted to calm markets by purchasing $15 million of AAVE tokens. According to reports

What Does Aave Labs' Revenue Sharing Proposal Entail?

Aave Labs' new framework would share income from frontend interfaces, swap integrations, and future non-protocol products. As reported This includes revenue generated through the official Aave app and CoW Swap integrations, estimated at up to $200k weekly. According to analysis The proposal explicitly aims to align long-term incentives between the development team and token holders. According to reports

Crucially, the plan addresses brand asset ownership questions that sparked the original conflict. As reported It outlines governance safeguards to prevent unilateral decisions about Aave's digital properties. According to reports The proposal would establish rules for commercial use of domains, social media accounts, and frontend gateways. A formal DAO vote will determine whether the revenue-sharing model moves forward. According to analysis

How Does the Dispute Affect Aave's Future?

The governance clash exposed fundamental tensions between decentralization ideals and operational realities. According to analysis DAO delegates emphasize that vague promises are insufficient, demanding binding agreements covering ownership and accountability. As reported Unless resolved, these structural issues could continue undermining token value despite strong protocol performance. According to reports The situation serves as a case study for DeFi governance challenges as projects mature. According to analysis

Aave Labs argues that expanding into real-world assets and institutional use cases requires sustainable funding. As reported Future upgrades like Aave V4 and broader GHO stablecoin adoption depend on clearer alignment. According to analysis Successfully implementing revenue sharing could reduce internal friction and support growth. According to reports Still, unresolved questions about authority boundaries between Labs and the DAO risk future disputes. According to analysis