Aave proposal to see ‘structural improvements’ after passing initial vote: founder

A proposal that has roiled Aave DAO in recent weeks will receive “structural improvements” that are “based on community feedback,” Aave founder Stani Kulechov said just moments after the proposal cleared an initial hurdle Saturday evening.

The proposal passed a so-called snapshot vote with more than 52% of votes cast in its favour and 42% in opposition.

Kulechov’s company, Aave Labs, has already amended the proposal in response to DAO feedback. Last week, Labs relaxed its aggressive timeline for moving Aave users to a newer version of the Aave protocol, v4.

The initial timeline frightened some members of the DAO, who said it was a risk the digital cooperative could not afford. More three-quarters of the DAO’s $286 million in lifetime revenue has come from the current version of the protocol, v3, according to data from TokenLogic.

V4 is currently undergoing security audits and is expected to be released later this year.

The controversial, wide-ranging proposal would have Aave Labs direct all revenue from Aave-branded products to the DAO. Such products include aave.com and the Aave mobile application.

But it would also have the DAO pay Labs $25 million for ongoing product development, another $17.5 million “payable upon specific product launches,” and 75,000 Aave tokens, worth about $9 million at Monday’s prices.

Critics have said that request is too steep, given the size of Aave’s treasury.

“We recognise there are many improvements based on feedback to be made to get the proposal to its final stage,” Aave Labs said on the DAO’s forum on Sunday.

“The goal is a token-centric model that positions Aave for the next decade of growth.”

Margin of Victory

The vote comes amid a heated debate over the future of the DAO and the Aave protocol.

Aave v3 is the largest protocol in DeFi, with nearly $27 billion in user deposits. But Labs has pushed for the DAO to turn its attention to v4, arguing it could dramatically boost protocol revenue.

“Aave V3 has served the protocol well, but it is approaching its architectural limits,” Labs wrote in the proposal. “V4’s architecture expands the range of revenue models the protocol can support.”

But prominent members of the cooperative have criticised Labs over its growing influence in DAO affairs. Marc Zeller, the head of Aave Chan Initiative, an Aave DAO delegate and service provider, previously referred to it as a “slow-motion coup.”

On Monday, Zeller said ACI would not continue debating the proposal, citing Kulechov’s use of Aave tokens to sway the outcome of the vote.

“The dice are loaded,” Zeller wrote in the Aave DAO governance forum.

“Continuing to negotiate inside a process where the outcome is predetermined does one thing: it gives that process legitimacy it hasn’t earned. We won’t do that.”

But Blockchain Capital General Partner Aleks Larsen said the proposal’s margin of victory would have been higher if his firm could participate in snapshot votes.

“A number of funds with material AAVE positions, Blockchain Capital included, hold tokens at a custodian that had deprecated Snapshot support,” he wrote.

“We were planning on signaling Yae in support of moving the Aave Labs proposal forward in the governance process, and had we and other institutional investors at this custodian had not been limited, we believe the proposal would have succeeded by a materially larger margin.”

Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at [email protected].