Key Insights
- The Aave DAO management was tested due to a scandalous purchase of the AAVE token for $15 million.
- An attempt to vote on brand and fee control in a community vote failed due to a procedural objection.
- Revenue disclosures revealed some tension between Aave Labs and the DAO that remained unresolved.
Aave DAO War Governance After Founder Rules to Exclude Tokens, Voting
The Aave DAO has also been the subject of new criticism, following Stani Kulechov, the founder and chief executive officer of Aave Labs, announcing that he had refuted rumours of a recent acquisition of AAVE tokens totalling $15 million to vote on an unsuccessful community vote.
Kulechov stated that the AAVE tokens he had purchased were worth $15 million and were not intended to be voted upon in the proposal, nor were they intended to cause a change in governance.
The purchase was clarified when some community members raised their concerns, and some of them stated that the timing of the acquisition was causing problems in an already strained governance process.
In his remarks, the acquisition was a personal investment in the project, rather than an attempt to influence decision-making in the Aave DAO.
The Aave DAO vote is based on Brand and Fee control.
The governance war began after a proposal was made to sell the brand property of Aave, which also included digital assets, to the Aave DAO. The vote was called with a majority of more than 55% against the proposal, about 41% abstaining, and only some 3.5% in favour.
Although the vote was voted to a term, it was discussed further in the Aave DAO before the vote was cast, with members stating that the proposal was tabled without proper notice or the normal governance process being followed.
It was proposed, however, after one of the community members, EzR3aL, posed questions over fee routing as part of a recent integration between CoW Swap.
According to the discussion, the swap fees generated during the integration process were deposited into a wallet managed by Aave Labs, not the Aave DAO treasury.
EzR3aL stated that this money was within the jurisdiction of the DAO and that they could not redirect the money before consulting the community on the issue.
The Governance Procedure is concerned with internal protests.
As the discussion continued, the members of the Aave DAO criticised the manner in which the proposal was presented. According to some of its members, the vote was hasty, and it did not conform to the tradition of governance.
The scandal was further exacerbated when Ernesto Boado, who was named as the author of the proposal, stated that he had never submitted it and had not given his consent.
Moreover, the procedural difficulties for the Aave DAO were introduced by these developments, regardless of the proposal’s content.
Revenue Growth Provides a background to the Aave DAO Debate.
The governance crisis happened in parallel with the new revelations of the financial performance of the Aave DAO. Kulechov stated that the DAO had generated over $140 million in revenue this year, surpassing the combined revenue of the last three years.
According to his statement, all DAO funds remain under the control of AAVE token holders, reinforcing the decentralised structure of the protocol’s governance.
Kulechov also stated that Aave Labs had not adequately explained how its products contribute to DAO revenue. He said future communications would more clearly outline how development activity aligns with the interests of the Aave DAO and AAVE token holders.
Token Purchase Raises Governance Sensitivities
Some participants questioned whether the acquisition could have influenced voting outcomes or perceptions, despite the founder stating that the tokens were not used in the vote.
Kulechov referred to the acquisition as a personal investment, indicating that he believes in the protocol’s future.
He stated that AAVE tokenholders have control over DAO funds and governance, and also highlighted that multiple service providers would be included in the Aave ecosystem.
