Aave DAO takes a drastic step: taking over Aave Labs resources redefines the game in decentralized governance

The Aave lending protocol faces a pivotal decision point. A new governance management initiative, which we observe on governance discussion platforms, aims to fundamentally transform the relationship between the decentralized structure and its original development team. This proposal would require the DAO to take over all intellectual and capital resources of Aave Labs, effectively transforming the protocol creator into a formally subordinate entity.

Origins of the conflict: from discreet tensions to an open power struggle

The current turmoil stems from a pressing issue related to the management of swap fees generated through the front-end interface. For a long time, these revenues went directly to Aave Labs instead of funding the shared DAO treasury. This practice revealed a deep divergence over who should receive the income generated by the Aave ecosystem.

The discussion quickly moved beyond technical financial details. AAVE token holders (, currently valued at $165.00 with a market cap of $2.51B), began loudly questioning their participation in the value created by the network they effectively govern.

Detailed mapping of the dispute territories: what exactly is proposed to change

The current initiative includes three key elements:

Full asset integration: All intellectual property belonging to Aave Labs — from source code to Aave’s trademarks — should transfer ownership to the DAO.

Reorganization of corporate structure: Aave Labs would need to transform into a company directly dependent on the decentralized organization, losing decision-making autonomy on strategic matters.

Shifting financial flows: Any income generated by Aave Labs from the use of the brand and protocol would have to flow into the DAO treasury, where the engaged AAVE community would decide on its allocation.

Why this fight has ignited with such intensity

Fundamentally, the question is: who truly wields power over the value-generating mechanisms within a decentralized structure? For nearly a decade, Aave operated on a delicate balance between the founding Dev team — which drove innovation — and the distributed community of token holders responsible for managing the network infrastructure.

However, this balance has recently broken down. Advocates of change argue that maximizing profits for broad AAVE holders is a natural consequence of the web3 model. Opponents will argue that stripping development teams of motivational funds could drastically harm the pace of innovation and the ability to attract talent.

Future scenarios: from DAO triumph to potential legal repercussions

If the AAVE community approves this initiative: The DAO will gain direct control over intellectual property and revenue streams. This will enable funding grants, experiments, and development through transparent governance structures managed by token holders. The prestige of decentralized governance will significantly increase in the industry’s eyes.

If the initiative faces resistance: Aave Labs could pursue legal action in jurisdictions where it is formally registered. Team members might leave the project, taking their experience and skills with them. The signal sent to future protocol creators could be serious — building within a DAO structure involves the risk of losing control over one’s creations.

Implications for the entire DeFi ecosystem

This confrontation transcends internal Aave disputes. It serves as a test of the practical limits of DAO models — whether they truly can manage resources and people in a way that attracts talent, or if they become tools serving the majority at the expense of expert minorities.

The outcome of this conflict will shape many future governance decisions in DeFi. It will send clear signals about the balance of rights between decentralized communities and foundational teams.

Questions every market participant should ask themselves

Who ultimately controls decentralized protocols — their creators or the community of token holders?

Historically, the Aave model has been hybrid: Aave Labs operated as a fairly autonomous entity, though formally under the DAO. The current proposal moves toward centralizing decision-making in the hands of token holders.

Can such a move increase the long-term capacity of the DAO to innovate?

Theoretically yes — financial flows directed into a shared treasury could fund solutions that commercial sales could not generate. Practically, it depends on whether the community can manage these funds wisely.

What legal complications might arise?

Aave Labs is formally registered in specific jurisdictions. Seizing its assets without consent would require a complex legal battle, the outcome of which remains uncertain.

Will other DeFi players closely watch this precedent?

Absolutely. The success or failure of this move will determine how other protocols structure the relationship between DAOs and their founders.

Conclusions: a historic test for decentralized governance

This initiative represents a practical test of decentralized management models under real-world conflicts of interest. If the DAO establishes solid frameworks for takeover, management, and utilization of Aave Labs’ intellectual legacy, it could set a precedent for future protocols.

If the conflict escalates into legal battles or causes a talent exodus, it will serve as a warning to future builders: building within a DAO involves significant risks of losing autonomy.

In either scenario, this decision will influence the trajectory of DeFi for years to come. AAVE holders must realize that their votes not only determine immediate profits but also shape the very foundations of the decentralized ecosystem in which they operate.