Aave developer Aave Labs has announced a strategic shift to share non-protocol revenue with AAVE token holders, aiming to heal a deep governance rift that erupted in late 2025 and sent the token down roughly 18% at its worst point.
The decision marks a compromise between the private development company and the decentralized community, following weeks of internal conflict over revenue flows, brand ownership, and control of Aave’s growing business lines outside its core lending protocol.
How the New Revenue Sharing Will Work
Under the new approach, revenue shared with token holders will not come from Aave’s core lending protocol. Instead, distributions will be funded by business activities developed and operated by Aave Labs outside the DAO-controlled protocol layer.
These revenue sources include:
- Real-world asset (RWA) tokenization, led by the Horizon product
- Institutional lending and consumer-facing financial applications
- The Aave App, a flagship mobile interface designed to onboard millions of new users
Aave Labs plans to submit a formal governance proposal in early 2026, outlining the exact mechanics, safeguards, and limits of the revenue-sharing model.
The Governance Conflict That Forced the Pivot
The announcement follows what many community members described as a “civil war” inside the Aave ecosystem.
Tensions escalated in December 2025 after Aave Labs replaced its frontend swap provider with CoW Swap. Critics accused the company of “stealth privatization” when it emerged that roughly $10 million in annual swap fees were being routed to Aave Labs instead of the DAO treasury.
The dispute culminated in a radical governance proposal on December 26, 2025, known as AIP 2025-01, which sought to make Aave Labs a subsidiary of the DAO and seize control of its intellectual property. The proposal was decisively rejected, with 55.29% voting against it.
At the heart of the conflict was a fundamental question: who should own the Aave brand, domain (aave.com), and social channels, the DAO or the private development company?
A Compromise Between Builders and the DAO
Aave founder Stani Kulechov described the new revenue-sharing model as a way to balance entrepreneurial agilitywith community alignment. By sharing profits from external business lines, Aave Labs aims to reward token holders without restricting its ability to innovate quickly in competitive markets.
The move effectively acknowledges token holder concerns while preserving the separation between the DAO-governed protocol and the company building commercial products on top of it.
Looking Ahead to 2026
The announcement comes at a pivotal moment for Aave. The protocol is preparing for Aave V4, a major redesign intended to unify liquidity across multiple networks and improve capital efficiency.
It also follows the official closure of a four-year SEC investigation, a development Kulechov said removes a major legal overhang and allows the team to focus fully on long-term growth.
Whether the new revenue-sharing framework fully restores trust remains to be seen, but the shift signals a clear attempt to reset relations between Aave Labs and its decentralized community, and to move into 2026 with a more aligned governance structure.
