Aave Hands Over the Keys: 100% of Product Revenue to DAO in Bold Bid to End “Civil War”

On Feb 12, 2026, Aave Labs proposed the “Aave Will Win” framework, sending 100% of product revenue to the DAO in exchange for $25 million funding. We break down the deal, the V4 upgrade, and why Marc Zeller calls it a “$50 million extraction attempt.”

Summary

On Thursday, February 12, 2026, Aave Labs submitted a governance “temperature check” proposing that 100% of all revenue from Aave-branded products—including swap fees, the aave.com front end, the upcoming Aave Card, and even an AAVE ETF—be directed entirely to the Aave DAO treasury.** **

In return, Labs is requesting $25 million in stablecoins and 75,000 AAVE to fund operations and product launches. The proposal, titled “Aave Will Win,” is designed to formally resolve an eight-month cold war between the for-profit development firm and the DAO over who truly controls the largest decentralized lending protocol.** **

If passed, it would mark one of the most aggressive experiments in token-holder capitalism, effectively transforming Aave Labs from a self-funded builder into a compensated contributor entirely subordinate to DAO governance. The market reacted immediately: AAVE ticked up 2% even as the broader crypto market bled red.

The “Aave Will Win” Framework: A Swap of Cash Flows for Cash

At first glance, the math seems simple—Aave Labs is offering to hand over the entire revenue stream of its commercial products. But scratch the surface, and this is less a donation and more a renegotiation of the protocol’s social contract.

Under the framework, Labs wants the DAO to ratify Aave V4 as the sole technical foundation for all future development. Once that is locked in, 100% of the economics generated by V3, V4, the aave.com interface, and future initiatives like the Aave Card, Aave Pro, and even a proposed AAVE ETF will flow directly into the DAO’s treasury. Currently, these fees—particularly the swap fees from the aave.com front end—have been flowing to a wallet controlled by Aave Labs, a decision that ignited the community’s fury back in December 2025.

So, what does Labs get in return? A $25 million stablecoin runway and 75,000 AAVE tokens, structured as a mix of upfront payment and streaming finance. Specifically:

$5 million paid immediately

$20 million streamed over the next 12 months

75,000 AAVE unlocked linearly month-by-month over two years

Three separate $3 million grants for the launch of Aave App, Aave Pro, and Aave Card

$2.5 million allocated to “Aave Kit” development

The proposal also calls for the creation of a new Aave Foundation—a legal wrapper that will hold the protocol’s trademarks and intellectual property, something a decentralized DAO cannot do directly.

Stani Kulechov, founder of Aave Labs, framed the move as a maturation of the relationship: “The framework formalizes Aave Labs’ role as a long-term contributor to the Aave DAO under a token-centric model.” In plain English: Labs stops acting like an independent vendor and starts acting like a contractor hired by the token holders.

Why V4 Is the Real Center of Gravity

You cannot understand this proposal without understanding Aave V4. This is not merely a patch or an optimization—it is a complete re-architecting of how liquidity moves across the Aave ecosystem.

V4 introduces a “hub and spoke” model. The “hub” is a unified cross-chain liquidity pool that acts as the central reservoir for all assets. The “spokes” are customizable, isolated markets that can be deployed on any network or for any specific use case—institutional lending, real-world assets, or even gaming—without fragmenting liquidity or forcing users to migrate capital repeatedly.

Why V4 Changes the Revenue Game

According to Aave Labs, V4 unlocks “revenue streams that are not easily possible in previous versions.” In practice, this means:

Isolated risk markets with their own fee structures

Institutional onboarding via Horizon, Aave’s permissioned lending platform

Native cross-chain arbitrage and fee capture within the hub

Modular deployment that allows new products to launch without core changes

For context, Aave V3 alone has generated over $100 million in annualized revenue. The bet here is that V4 will dramatically expand that top line—and under this proposal, 100% of that expansion accrues to the DAO, not to Labs’ private balance sheet.

The Ghost of December: A Timeline of Distrust

This proposal did not emerge from a vacuum. It is the culmination of a three-month cold war that nearly tore the Aave community apart.

December 2025: The Switch

On December 11, a delegate known as EzR3aL discovered that Aave Labs had quietly redirected swap fees from the aave.com interface—funds that previously flowed to the DAO treasury—to a private wallet under the company’s control. The community erupted. What was framed as a technical partnership with CoW Swap was perceived as a seizure of DAO-owned revenue.

The “Poison Pill” Counterstrike

In response, a group of token holders proposed a radical “poison pill”: forcibly seize Aave Labs’ intellectual property, brand assets, code repositories, and even equity, effectively converting the private company into a DAO subsidiary. The proposal failed, with 55% voting against and 41% abstaining. But the message was clear: the DAO was no longer willing to accept ambiguous ownership.

Hasu’s Warning

Lido advisor Hasu weighed in during the chaos, calling the situation proof that “token/equity dual structures are fundamentally unworkable.” His thesis was simple: when a protocol is governed by token holders but commercially operated by an equity-backed startup, the incentives inevitably collide. The equity holders are fiduciarily obligated to maximize shareholder value; the token holders are trying to maximize protocol value. These are not the same thing.

The “Aave Will Win” framework is, in many ways, Labs’ attempt to dissolve that dual structure—to subordinate equity to the token.

Marc Zeller’s Opposition: “A $50 Million Extraction”

Not everyone is buying the benevolent narrative. Marc Zeller, founder of the Aave Chan Initiative (ACI) and one of the DAO’s most influential delegates, immediately labeled the proposal “a cash-out framed as a benevolent act.”

In a sharp response posted to the governance forum, Zeller accused Labs of executing a classic negotiation gambit: “Open with egregious terms, absorb backlash, then reframe a smaller ask as ‘the reasonable middle ground’ while still extracting a massive amount.”

His math differs from Labs’ framing. Zeller estimates the true ask is closer to $50 million when you factor in:

The $25 million stablecoin request

The 75,000 AAVE (worth approximately $8-10 million at current prices)

The $15 million in grant-based milestone funding

Opportunity cost of V3 revenue Labs is “offering” to give up—revenue they already captured unilaterally in December

Zeller’s critique cuts to the heart of the legitimacy question: “Labs is acting as if it can impose outcomes regardless of governance process. If token holders are comfortable with that, so be it, but I’m not going to pretend this is healthy governance.”

What Is Aave? A 30-Second Refresher

For readers joining from outside DeFi, Aave is the largest decentralized lending protocol in crypto, with over $26 billion in user deposits and more than 50% market share of the on-chain lending sector.

Users deposit assets (like ETH or USDC) to earn interest. Borrowers can take out loans by over-collateralizing their positions. Aave pioneered innovations like:

Flash Loans: Uncollateralized loans that must be repaid within the same blockchain block

GHO: Aave’s native decentralized stablecoin

aTokens: Interest-bearing tokens representing deposits

Credit Delegation: Allowing depositors to lend their credit line to trusted third parties

Unlike traditional finance, Aave has no bank tellers, no credit checks, and no geographic restrictions. It is governed entirely by AAVE token holders—at least, that is the theory. The current dispute tests whether that theory holds when a commercial builder holds the keys to the brand.

AAVE Tokenomics: The Engine Under the Hood

To understand what is at stake, you have to understand the AAVE token itself.

Fixed Supply, Decentralized Distribution

AAVE has a fixed supply of 16 million tokens, all of which are already in circulation. Unlike many protocols that continuously mint new tokens to pay for operations, Aave transitioned away from inflationary rewards years ago. The migration from LEND to AAVE in 2020 distributed tokens widely, with no single entity holding more than 1.6% of the supply—a level of decentralization that competitors like Compound envy.

The $50 Million Annual Buyback

Since 2024, Aave has operated a $50 million annual buyback program. The DAO uses excess protocol revenue to purchase AAVE from the open market, creating consistent buying pressure and offsetting any remaining inflationary emissions. This has transformed AAVE from a pure governance token into something approximating a cash-flow-bearing asset.

The Umbrella Upgrade

In late 2025, Aave replaced its original Safety Module with Umbrella, a system that allows users to stake yield-bearing assets (like aUSDC or aWETH) rather than just AAVE itself. This reduces sell pressure on the AAVE token while still providing a backstop for protocol shortfalls. Stakers earn yield from lending plus additional AAVE rewards—a more capital-efficient security model.

The irony of the current proposal is that Aave Labs is asking the DAO to fund its operations with stablecoins rather than AAVE emissions. This is, in fact, the mature tokenomic approach: pay builders with cash flow, not dilution.

The Elephant in the Room: Can Aave Scale Without Labs?

This proposal forces the DAO to answer an uncomfortable question: Is Aave Labs replaceable?

The company holds institutional knowledge of the codebase. Its engineers built V3 and are deep into V4 development. Stani Kulechov is not just the CEO; he is the public face of the protocol. The “poison pill” vote in December demonstrated that while the DAO is willing to signal displeasure, it is not yet willing to actually seize the keys.

By asking for a funded mandate, Labs is effectively daring the DAO to put its money where its mouth is. If the DAO funds Labs generously, it legitimizes the company as the official development team. If the DAO rejects the funding, Labs could theoretically walk away—taking V4 expertise with it.

This is not a governance dispute; it is a credible commitment problem.

2026 and Beyond: The Three Pillars of Aave’s Future

Kulechov published his “2026 Master Plan” in December 2025, hours after the SEC officially closed its four-year investigation into Aave without taking enforcement action. That plan rests on three pillars, all of which are embedded in the current proposal:

1. Aave V4

The technical foundation. Designed to handle “trillions of dollars” in assets by unifying liquidity and enabling customized institutional markets.

2. Horizon

Aave’s permissioned real-world asset (RWA) market. Currently holding $550 million in net deposits. Target for 2026: $1 billion+. Partners include Circle, Franklin Templeton, and VanEck.

3. Aave App

The mobile front end. Launched in late 2025 on iOS. Kulechov calls it the “Trojan horse” for mass adoption, targeting 1 million users in 2026. The mobile fintech market is valued at over $2 trillion; Aave wants a slice.

All three pillars are explicitly funded in the “Aave Will Win” proposal. If the DAO approves the framework, it is effectively endorsing the entire 2026 roadmap.

What Happens Next?

This is a temperature check, not a binding vote. The Aave DAO will now debate the proposal for approximately one week. If the temperature check passes, Labs will submit a formal Aave Improvement Proposal (AIP) with exact on-chain execution details.

The outcome is far from certain. Marc Zeller’s opposition carries weight—ACI is one of the largest voting entities in the DAO. But Zeller is not monolithic. Other delegates, including Wintermute CEO Evgeny Gaevoy, have signaled that while they voted against the “poison pill” in December, they expect Labs to engage seriously on long-term value capture.

The market is watching. Aave is the blue chip of DeFi lending. How it resolves this conflict will set a precedent for every other protocol wrestling with the same question: Who really owns a decentralized project?

If the DAO pays up and Labs delivers V4, the model works. If the DAO refuses and Labs pivots away, the model breaks. There is no third option.