Dilmi sadnunika

🔍WHATS HAPPENING AT AAVE? PT. 3: LABS V4 PROPOSAL

Aave Labs just proposed a major shift in DAO economics with the ‘AAVE WILL WIN’ framework.

Making Aave fully token-centric, the proposal puts forward:

🕊️100% of revenue from ALL Aave-branded products would flow to the DAO treasury
🔜This covers all swaps, mobile, Aave Card, future products, and any non-protocol revenue

🕊️ Aave branding IP would be transferred to a newly formed Foundation

🕊️ Labs would request $25M in stablecoins + 75,000 $AAVE + growth grants for one year

🕊️V4 becomes the core architecture, introducing fixed-rate lending, RWAs, and institutional-grade infrastructure

👀What This Means

📥Revenue Base Expansion:

The proposal materially expands the DAO’s revenue base beyond V3’s $100M/year in protocol fees by adding offchain and product-level income streams strengthening treasury growth and reducing reliance on lending spreads alone.

🧬Structural Incentive Alignment

Aave Labs transitions from capturing frontend and product revenue to operating under a DAO-approved annual budget.

This removes structural value leakage and directly aligns Labs’ success with treasury growth, ensuring incentives between builder and token holder move in the same direction.

💪Stronger Token-Centric Value Accrual

If enforced transparently, all economic value generated under the Aave brand accrues to the DAO.

That firmly positions $AAVE at the center of governance, capital allocation, and long-term upside, whether through buybacks, ecosystem expansion, liquidity programs, or strategic initiatives.

🏛 Institutional-Ready Architecture

With V4 introducing fixed-rate lending, RWAs, and institutional-grade infrastructure alongside a Foundation holding brand IP, the framework also creates cleaner structural separation between governance, product development, and brand stewardship.

This is a format better suited for institutional integration at scale.

⚖️Governance Maturity & Reset

The proposal represents a governance inflection point. Community pressure around transparency and alignment has produced a structural response — reinforcing Aave’s identity as a DAO-first protocol.

❓ Bigger Questions the DAO Must Resolve Before Voting

1️⃣ “100% Revenue” Requires DAO Control

Revenue is defined as gross product revenue minus partner revenue share, rebates, subsidies, and discretionary incentives. These are all determined by Labs.

There is currently NO independent audit requirement, NO cap on deductions, and NO DAO approval threshold.

2️⃣ The Treasury Impact Is Material

The DAO treasury sits around $160M, with roughly $100M in non-AAVE assets.

The proposal requests over $42M in stablecoins plus 75,000 AAVE, roughly 30% of total treasury value in one bundled vote.

That is a significant allocation to a single service provider. Funding terms should be evaluated with enforceable commitments in place first.

3️⃣ V4 is Unproven

V3 generates $100M+ annually and accounts for the overwhelming majority of DAO revenue historically.

The proposal suggests ratifying V4 as the core architecture while potentially pausing further V3 feature expansion.

Although V4 be the future, it is pre-mainnet and revenue remains unproven.

A parallel-track approach may better protect the DAO’s existing cash engine.

4️⃣ Governance Power & Foundation Independence

75,000 $AAVE carries voting power. Any entity receiving governance tokens should meet full wallet disclosure standards.

If a new Foundation is to control Aave branding IP, its independence must be structural and verifiable — not simply nominal.

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🔴Bottom-line:

This is arguably the biggest governance reset since AIP-1.

The community pushed for alignment and governance delivered a response.

Now the DAO must ensure that alignment is enforceable, transparent, and sustainable.

This is a pivotal moment in DeFi governance standoffs.