An ongoing dispute has emerged between the Aave decentralized autonomous organization (DAO), which oversees the Aave decentralized finance (DeFi) protocol, and Aave Labs, the primary development firm for Aave products. The contention centers around fees arising from the newly announced integration with decentralized exchange aggregator CoW Swap.
The issue was brought to light by pseudonymous Aave DAO member EzR3aL, who indicated that the fees generated from crypto asset swaps via CoW Swap were directed to an alternative on-chain address, rather than the Aave DAO treasury.
These fees are instead routed to a private address managed by Aave Labs. EzR3aL posed several questions, including why the DAO wasn’t consulted before the fee routing decision, arguing that the fees should belong to the DAO.
“Another entity, rather than the Aave DAO, is receiving at least $200,000 per week worth of Ether,” EzR3aL stated, noting this could translate to $10 million in potential annual revenue denied to the DAO.
In response, Aave Labs asserted that the front-end components for the website and application interfaces have always been under their jurisdiction.
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According to Aave Labs, protocol-level changes—such as interest rate policies and adjustments to smart contract code—have historically been subject to the DAO’s oversight.
Additionally, Aave Labs claimed they funded the development of the “adapters,” the code lines that facilitate swaps and other integrations.
However, this response did little to alleviate the tensions, as several DAO members emphasized that the Aave DAO financed the development of the original adapter technology; thus, revenue from the integration should revert back to the DAO.
Marc Zeller, founder of the Aave-Chan Initiative, a delegate platform for the Aave governance community, commented that the decision to direct fees exclusively to Aave Labs is “extremely concerning.”
“Aave Labs, in pursuit of their own monetization, redirected Aave user volume towards competition. This is unacceptable,” Zeller remarked.
Cointelegraph reached out to Aave Labs but did not receive an immediate response by the time of publication.
The conflict underscores the complexities inherent in managing a DAO, a novel governance structure that offers advantages over traditional business models yet introduces its own unique challenges.
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