Aave Labs Catches Flak for Undisclosed Fee Diversion

Aave Labs – the centralized developer entity behind crypto lending platform Aave – finds itself embroiled in controversy with community members over whether recent DEX integrations are unjustly diverting revenues away from token holders and towards Lab.

What's the Scoop?

• Initial Complaint: In an Aave DAO governance forum post yesterday, pseudonymous delegate EzR3aL noted that swap fees via a new introduced CoW SWAP DEX integration on the Aave frontend no longer flow to the DAO as they had under a previous Paraswap referral setup.
• Labs Product: In response, Aave Labs confirmed it was now taking the fees, viewing it as just compensation in light of the fact that Labs maintains Aave (the product) and operates its website interface.
• Extremely Concerning: Marc Zeller of the Aave Chan Initiative – an influential Aave DAO governance group – labeled the situation as "extremely concerning" on X. "The stealth privatization of approximately 10% of Aave DAO's potential revenue, leveraging brand and IPs paid for by the DAO, represents a clear attack on the best interests of the AAVE Token holders."
• Incentive Issue: This is not the first time a crypto token's community has run into incentive misalignment problems with its centralized developer entity. Notably, Uniswap Labs charges frontend fees on certain swaps, skimming profit for equity holders at the detriment of real revenues for onchain liquidity providers and potential earnings from tokens tokens holders.
• Right to Monetize: Aave founder Stani Kulechov countered that any fees which previously flowed to the DAO via Paraswap were donations, contending that it is "perfectly fine for Aave Labs to monetize its products."