- Aave has announced a new framework under which it will direct all the network’s product revenue to the Treasury.
- The proposal also outlines the formation of a new Foundation that would steward all the network’s trademarks.
Aave has published a new improvement proposal that seeks to align the Aave DAO and Aave Labs under one token-centric model that channels all network revenue to the DAO Treasury.
The proposal, titled ‘Aave Will Win Framework,’ lays out a new system that harmonizes the responsibilities of both the DAO and the Labs, which currently have separate roles. Additionally, it establishes Aave V4 as the protocol’s foundational technology layer for future growth, while committing to fully protect and promote the Aave brand.
Aave launched in 2017 as ETHLend, and since then, it has expanded to become the largest DeFi protocol in the market, commanding a 60% market share in decentralized lending. However, to maintain its position in an ever-changing market where traditional finance is getting increasingly involved, the network must move fast, build great tools and capture new markets. This makes it vital for the Labs and the DAO to work together under a new framework, the new proposal says.
It’s the second proposal this year on revenue sharing. In early January, the Labs suggested sharing non-protocol revenue with token holders, as we reported.
‘Aave Will Win’ Rethinks Revenue Generation and Distribution
Under the current framework, the DAO collects all the protocol fees, allowing token holders to govern the protocol. However, the Labs still controls aave.com, which reportedly generates over $10 million annually.
The ‘Aave Will Win’ proposal suggests that the DAO now receives all the revenue that would have gone to the Labs from aave.com, as well as other revenue from the Aave App, the Aave Card, the Aave Pro interface, the Aave Kit enterprise solution, and the Aave Horizon RWA market.
Image courtesy of Aave.comSince it will hold all the revenue, the DAO will fund the budget for product growth incentive. However, the Labs can redirect some of the product inflows to directly incentivize user growth. This allows it to deploy capital quickly without waiting from governance votes at the DAO.
Aave Will Win also proposes that the network explores how it can expand its revenue away from the product layer. It suggests doubling down on the protocol layer, which is powered by Aave v4 and v3. v3 already generates over $100 million annually, and v4 expands on these capabilities with new monetization features that the Labs believes will bring in more revenue for the protocol.
“V4’s architecture expands the range of revenue models the protocol can support, which is why governance analysis considers higher-scale revenue scenarios when planning long-term operations,” the proposal outlines.
Additionally, the Labs proposes that the protocol creates a new Foundation that would be charged with owning and stewarding Aave trademarks. These are currently held by the Labs, but it acknowledges that there have been concerns over a single entity controlling everything in a decentralized ecosystem. The details of the new Foundation are to be revealed in a follow-up proposal.
It added:
AAVE trades at $112.30, gaining 2% over the past 24 hours, although it has wiped out over a third of its value since mid-January.
Source: https://www.crypto-news-flash.com/aave-proposes-will-win-framework/?utm_source=rss&utm_medium=rss&utm_campaign=aave-proposes-will-win-framework
