Aave governance dispute escalates as DAO challenges Aave Labs over CoW Swap fees and protocol IP
A simmering dispute inside the Aave ecosystem has exploded into a high-stakes clash over Aave governance, fee flows, and control of core protocol assets.
DAO questions CoW Swap fees and revenue flows
The confrontation between the Aave DAO and Aave Labs surfaced in December after a partnership with CoW Swap was announced on December 4.
The deal aimed to improve swap pricing and provide MEV protection directly on the Aave interface. However, concerns quickly shifted from product benefits to who controls the resulting revenue.
On December 11, an Aave delegate published on-chain analysis showing that swap fees from the new CoW Swap contract on the Aave frontend were flowing to a wallet controlled by Aave Labs, not the DAO treasury.
A delegate from Aave Chan Initiative described the arrangement as “stealth privatization” and estimated that roughly $10 million in annual revenue was being diverted away from tokenholders.
Delegates push for DAO control of brand and IP
In response, tensions escalated on December 16 when a governance proposal demanded that all Aave intellectual property, code, and brand assets be transferred under direct DAO control. Moreover, the measure would effectively convert Aave Labs into a DAO-owned subsidiary and require the company to return past revenue earned using the Aave brand, according to the proposal.
A second governance proposal, introduced by a former Aave Labs chief technology officer, argued that the DAO should own trademarks, domains, and social media accounts when it is the entity funding most development and marketing.
That said, this camp framed the issue as aligning economic rights and branding with those who bear protocol risk.
Aave Labs defends ownership of website and brand
Aave Labs publicly rejected accusations of a hidden fee switch. The company said that CoW Swap-related cow swap fees on the interface should be viewed as a voluntary contribution from a private firm, not as protocol-level revenue.
It reiterated that the DAO owns the smart contracts, while Aave Labs owns and operates the website.
According to the company, it covers hosting, security, and frontend engineering costs for the platform. However, critics contend that this arrangement gives a private company outsized power over revenue streams and user access in what is marketed as a decentralized protocol.
Controversial Aave Snapshot vote over brand assets
On December 23, Aave Labs initiated an aave snapshot vote on Snapshot, proposing to transfer control of brand assets, domains, social accounts, GitHub repositories, and npm packages to AAVE token holders. The move appeared to answer calls for more direct DAO oversight, yet it sparked fresh controversy around timing and process.
The former CTO said he did not approve the vote, calling its timing “disgraceful” and urging delegates to abstain because discussions were still underway.
Moreover, community members criticized the decision to launch the vote during the holiday period and raised concerns about new delegations that accumulated voting power shortly before the snapshot.
Core governance questions for decentralized protocols
The dispute over dao ip control highlights structural tensions in decentralized finance. While smart contracts may be on-chain, crucial off-chain assets such as domains, user interfaces, social channels, and code repositories often remain under control of a centralized company.
However, many tokenholders argue that economic alignment demands these resources eventually migrate to community control.
Industry analysts say the conflict could become a landmark case for decentralized protocol governance. The eventual settlement may influence how other DeFi teams structure relationships between tokenholder DAOs and core development companies, especially regarding revenue rights and brand ownership.
Founder token purchases and AAVE price performance
Amid the governance turmoil, Aave’s founder has been aggressively buying AAVE tokens. Over the past week, he acquired a total of 84,033 AAVE, spending about $12.6 million at an average price of $176. At current levels, he is sitting on an unrealized loss of roughly $2.2 million, according to on-chain data.
Moreover, market performance has weakened in parallel with the controversy. AAVE is trading around $155–160 today, compared with roughly $308 at the start of 2025, leaving the token down about 50% year to date.
Aave DAO vs Aave Labs: implications for future governance
The broader clash between the DAO and Aave Labs centers on who ultimately controls protocol revenue, brand, and user experience. One key proposal explicitly frames the conflict as an aave labs conflict that could redefine how value and authority are shared between private developers and tokenholders.
More broadly, the episode underscores that Aave frontend revenue, domain ownership, and social media control are not minor details but central to power in DeFi ecosystems.
That said, regardless of the final outcome, many observers expect the case to inform governance playbooks across other lending platforms and on-chain protocols.
In summary, the Aave Labs–DAO confrontation over CoW Swap fees, intellectual property, and brand control is testing the limits of tokenholder power and could set precedent for how decentralized protocols balance community authority with centralized execution.
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