A dispute over revenue sharing has erupted between the community that controls DeFi lender Aave and its main developer, Aave Labs.
The dispute centers on Aave Labs’ recent decision to integrate CoW Swap as the underlying infrastructure for trading on the protocol’s main website. This switch replaced our previous integration, ParaSwap, which was generating referral fees to Aave DAO Treasury.
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DAO members question economic fallout due to interface update
Government representatives say the changes cut off a source of income of about $200,000 per week. On an annualized basis, they estimate the impact to be around $10 million, transferring value away from token holders.
Mark Zeller, founder of the Ave Chan Initiative, criticized the move, calling it a “stealth privatization” of brand assets.
Zeller claimed that Aave Labs unilaterally changed the economic agreement without obtaining approval from the DAO that governs the underlying smart contracts.
“In pursuit of its own monetization, Aave Labs has shifted Aave user numbers to competition. This is unacceptable. By making this merger, the Aave protocol has lost two revenue streams that cannot easily be replaced,” he wrote.
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Zeller warned that the lack of communication raises concerns about how future upgrades will be handled.
He specifically pointed to the upcoming V4 upgrade and questioned whether other “accessory features” could also be ringfenced from the DAO.
“It is important to consider the full picture in defining whether Aave Labs breached the fiduciary duties expected of Aave DAO and AAVE token holders, and what should be expected from V4 in general,” Zeller concluded.
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Aave Labs defensive moves
In a detailed response, Aave Labs founder and CEO Stani Kulechov refused to characterize the missing funds as stolen proceeds and defended the merger.
Kulechov claimed that previous fees from ParaSwap were “discretionary surplus” rather than mandatory protocol fees.
“It was never a fee switch, it was a donation of surplus money to the DAO,” he said.
He also drew a clear line between the Aave protocol, DAO-managed decentralized smart contracts, and front-end interfaces. He explained that the interface is a private product funded and maintained by Aave Labs.
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Kulechov said Aave Labs is covering the engineering and security costs for the website. He added that DAO does not subsidize ongoing product development costs.
Therefore, the company claims the right to monetize the interface to ensure its sustainability.
“It’s perfectly fine for Aave Labs to monetize its product, especially since it doesn’t touch the protocol itself,” he says.
The developer also reiterated Kulechov’s position and admitted that he had not been able to effectively communicate the changes.
The company said it switched to CoW swaps not to generate additional revenue, but to provide better execution prices and stronger protection against MEV (Maximum Extractable Value).
