Who's Really in Charge of Aave? Labs vs DAO Explained

Key Takeaways

• The conflict between Aave Labs and Aave DAO centers on fee allocation and value ownership, not just frontend tools.
• While the DAO governs the protocol's smart contracts, Aave Labs claims it can monetize its own products, prompting debate over decentralization and revenue sharing.
• Tools like Cwallet give users greater visibility and control over their DeFi positions, helping navigate governance and revenue dynamics in protocols like Aave.

Aave is one of the biggest DeFi protocols in the crypto world, known for decentralized lending and borrowing. The token $AAVE powers governance and rewards, while the protocol itself holds billions in assets. But a recent governance dispute has sparked a debate over a fundamental question: Who truly owns Aave — the Aave DAO (Decentralized Autonomous Organization), or Aave Labs, the development team behind the ecosystem?

This conflict isn't just about fees or technical updates. It's about who controls the value generated by the Aave ecosystem and how the benefits should be shared between contributors, token holders, and developers.

The Core of the Conflict: Aave Labs vs Aave DAO

At the heart of the debate is a recent change by Aave Labs to the Aave front‑end interface aave.com. Instead of using the previous Swap integration (Paraswap), the platform now uses CoW Swap for token exchanges. According to governance delegates and on‑chain analysis, this new setup diverts swap fees — roughly 15–25 basis points — away from the Aave DAO treasury and toward addresses controlled by Aave Labs.

Under the old system, surplus fees from swaps were automatically sent into the DAO treasury, which benefits all $AAVE holders and supports ecosystem growth. The shift to CoW Swap changes this dynamic, raising questions about fee allocation and long‑term revenue.

Some community delegates have called the change a "stealth privatization" of revenue that historically belonged to the DAO, arguing that the DAO — as the on‑chain governing body — should control and receive most of the value created by the protocol.

Where Aave Labs Sees It Differently

Aave Labs, led by founder Stani Kulechov, defends the decision by emphasizing the distinction between the protocol and front‑end products. The DAO manages the underlying smart contracts and governance logic of Aave, while Aave Labs operates independent products like the official website and user interface. According to this perspective, labs believe it is reasonable to monetize products they build and maintain — especially when those products don’t directly alter the core protocol.

In other words:

• Aave DAO governs the protocol and its on‑chain economics.
• Aave Labs builds, funds, and runs products — and argues it should retain revenue from those products to support ongoing development.

This distinction may seem subtle, but it cuts to the heart of decentralized governance: who makes decisions, who takes risks, and who captures the value created.

Why This Matters for DeFi and $AAVE Holders

Governance and Decentralization

At its core, DeFi promises decentralized control — meaning users and token holders should influence protocol decisions through DAO voting rather than a single entity. When revenue flows shift away from the DAO, some community members worry it could weaken the decentralized ethos that defines DeFi.

Revenue and Ecosystem Growth

The dispute is not just philosophical — it has real economic implications. Critics estimate that the fee diversion could amount to about $10 million in annual revenue that would otherwise have gone to the DAO treasury.

Impact on $AAVE and MegaETH Plans

Complicating the situation, recent proposals to deploy Aave V3 on MegaETH — a separate blockchain — also raised questions about revenue sharing and incentive allocation, especially if a private entity benefits disproportionately from assets supported by the DAO.

In the long term, how these disagreements are resolved may influence confidence in the governance model and the perceived value of $AAVE as a DeFi governance token.

How Crypto Users Can Safely Navigate Aave and DeFi Governance

With debates like this unfolding, it's more important than ever for DeFi users to stay informed — and to manage their holdings with reliable tools. Protocol changes, revenue shifts, and frontend integrations can all affect user experience and the economics of DeFi interactions.

That's where Cwallet can help. As a secure, all‑in‑one crypto wallet and portfolio tool, Cwallet allows users to:

• Track DeFi holdings across multiple protocols (including Aave and others)
• Monitor swaps and collateral positions with clarity
• Access features like spot trading and diversified liquidity exposure
• Maintain safe custody of assets while staying up to date on governance developments

By consolidating activity across exchanges and DeFi protocols, Cwallet helps users stay in control — even when ecosystem dynamics are evolving.

In short, Aave is run by both Aave Labs and its DAO, each handling different parts of the project. If you’re new to DeFi, knowing who does what helps you make smarter choices and stay safe. Tools like Cwallet make it easy to track, swap, and manage your $AAVE while exploring the platform.

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