Aave Labs Introduces Two-Part Licensing Framework for Aave V4 Repositories

• Aave Labs has proposed a two-part licensing framework for V4 repositories: a business source license and a contributor licensing agreement.
• The first would restrict commercial use of all core repositories for some time, while the second would allow the Aave DAO to use and modify code from contributors.

Aave Labs has introduced a new proposal for a two-part licensing framework for V4 repositories that would expand community contributions and provide more clarity around the use of the repositories.

The Labs published a TEMP CHECK detailing the new proposal. It suggests two frameworks: a Business Source License (BUSL) for the core V4 code, and a Contributor License Agreement (CLA) that extends to any developer contributing code to the network. A TEMP CHECK on Aave is a non-binding and off-chain vote that is used to gauge how the community feels about a proposal before it’s submitted for an official vote.

V4 is the latest version of the Aave protocol and is expected to be fully implemented this year, transitioning the DeFi network from V3, which it currently relies on. Under V3, the network adopted a BUSL licensing framework where the codebase was protected from commercial use for a defined period before being open-sourced.

However, with V4, the network is suggesting a few changes. According to the Labs, one of the factors behind the changes is that it expects significantly higher contributions from the community than with V3. Second, it seeks to provide clarity; under V4, each file in the repository will contain a small license identifier in its header, indicating which license governs its code. Previously, a single license would apply across the entire codebase.

Aave V4 Preparations Amid $27M Glitch

Under the proposal, the BUSL licensing stipulations will not change from V3. The DAO will be the owner of the V4 codebase (the Labs currently holds the copyright on behalf of the DAO), which will become open-source on the Change Date, which will be within five years from the launch date.

Users who seek to contribute code to V4 will have to accept the CLA, granting the entire community the right to access the code they contribute. This will give the community “a consistent, irrevocable right to use, incorporate, and sublicense their contribution as part of the canonical codebase,” the TEMP CHECK says.

The proposal comes on the same day that Aave users suffered $27 million in liquidations following a glitch that affected the oracle price of wstETH. According to blockchain analysts, the protocol did not incur any bad debt, but some users with healthy positions were unfairly liquidated.

The mishap is attributed to Chaos Labs, Aave’s primary risk management provider, whose system lowered the wstETH/stETH ratio, making the price of wstETH appear lower than it actually was. This led to users’ collateral value dropping and some positions falling below the liquidation threshold, despite being in healthy positions in reality.

Chaos Labs founder Omer Goldberg acknowledged the error and revealed that all affected users would be fully reimbursed.

Aave has been rocked by infighting among its leadership groups, with BGD Labs and Aave Chan Initiative announcing they were exiting within the next few months. They both blamed the Labs for their departure.