A conflict between the Aave decentralized autonomous organization (DAO), which oversees the Aave decentralized finance (DeFi) protocol, and Aave Labs, the primary development entity for Aave products, is escalating concerning fees from the new integration with decentralized exchange aggregator CoW Swap.
The matter was brought up by pseudonymous Aave DAO member EzR3aL, who claimed that the fees from crypto asset swaps via CoW Swap were being directed to another on-chain address, rather than the treasury of the Aave DAO.
Instead, the fees are directed to a private address managed by Aave Labs. EzR3aL posed several inquiries, questioning why the DAO was not consulted before the fees were allocated and asserting that the fees rightfully belong to the DAO.
“Another entity, rather than the Aave DAO, is receiving at least $200,000 per week in Ether,” EzR3aL noted, stating this equates to a potential annual loss of $10 million for the DAO.
Aave Labs responded that the front-end components for the website and application interfaces have always been under the domain of Aave Labs.
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Changes at the protocol level, including interest rate policies and approving modifications to smart contract code, have traditionally been governed by the DAO, Aave Labs indicated.
Aave Labs also asserted that it was responsible for funding the development of the “adapters,” the code lines enabling swaps and other integrations.
Nevertheless, the response failed to alleviate tensions, with several DAO members contending that since the Aave DAO funded the original adapter technology’s development, the revenue from the integration should revert to the DAO.
Marc Zeller, founder of the Aave-Chan Initiative, a delegate platform serving the Aave governance community, expressed that the decision to redirect the fees solely to Aave Labs is “extremely concerning.”
“In pursuing its own monetization, Aave Labs redirected Aave user traffic towards competitors, which is unacceptable,” Zeller asserted.
Cointelegraph reached out to Aave Labs but did not receive an immediate response by the time of publication.
The dispute underscores the intricate nature of managing a DAO, a novel governance and organizational form that offers advantages over traditional business structures but also presents distinct challenges.
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