Aave Labs has approached its community members with a proposal to gain approval for a $50 million funding package that would shift all revenue from Aave’s products to the Aave DAO treasury.

The initiative comprises almost $42.5 million in stablecoins, split into a $25 million primary grant and $17.5 million contingent on achieving product milestones. Additionally, it offers 75,000 Aave tokens valued at around $8 million at the time of the proposal. Should the funding be sanctioned, the stablecoin grants will be doled out over time, with milestone payments being disbursed upon the launch of new products.

In return, Aave Labs would allocate 100% of product revenue to the DAO. This includes earnings from aave.com, the planned Aave App, Aave Card, Aave Pro, Aave Kit, and Aave Horizon. The framework also seeks to secure tokenholder endorsement for the Aave V4 protocol, which would be its long-term technical backbone while establishing a foundation to manage and develop the Aave brand.

This proposal signifies a shift in Aave’s approach to capturing and distributing value, unifying protocol and product revenues under the DAO, transitioning Aave Labs toward a DAO-funded operational model amidst ongoing governance struggles.

Governance Concerns over Voting Power

Some community members expressed apprehensions regarding the funding request. Marc Zeller, founder of the Aave Chan Initiative, noted that the $50 million package could heavily impact the DAO treasury.

Zeller suggested splitting the vote into various proposals addressing revenue alignment, V4 ratification, foundation creation, and funding. He emphasized the need for clear definitions of “revenue” and independent verification of income directed to the DAO, voicing concerns about the governance implications of the 75,000 Aave token grant and the need for wallet holdings transparency among recipients of DAO tokens.

Crypto commentator DefiIgnas depicted the proposal as a notable compromise that AAVE holders would likely appreciate, while highlighting the necessity for clearer governance disclosures linked to the AAVE grant.

Aave Labs framed this initiative as a transition towards a ’token-centric’ model that synchronizes value accumulation with the DAO’s interests. Stani Kulechov stated on X that by channeling product revenue to the DAO, operational capacity for funding growth and other projects would be enhanced, positioning the DAO to seize growth opportunities as it deems appropriate.

Proposal Following Rejected IP Vote

This proposal follows a recent contentious governance episode where Aave tokenholders turned down a suggestion to transfer control of the protocol’s brand assets to a DAO entity.

On January 3, Kulechov outlined a broader strategy to expand beyond lending in decentralized finance and reconsider how non-protocol revenue is distributed to token holders.

The current proposal encapsulates aspects of this vision, merging revenue consolidation, V4 ratification, and a new foundation structure into a unified strategic proposition. The Temp Check is an initial non-binding vote devised to gauge community backing, which would proceed through additional governance phases before any funds could be allocated.