Aave Governance in Turmoil Over $10M Annual Fee Diversion to Aave Labs

A significant governance dispute has erupted within the Aave ecosystem, pitting the Aave decentralized autonomous organization (DAO) against Aave Labs, the protocol's primary development company. The conflict centers on fees generated from the recent integration with decentralized exchange aggregator CoW Swap.

The issue was raised by pseudonymous Aave DAO member EzR3aL, who revealed that swap fees—estimated at at least $200,000 worth of Ether per week—are being routed to a private on-chain address controlled by Aave Labs instead of the Aave DAO treasury. EzR3aL argued this amounts to a potential annual revenue loss of over $10 million for the DAO and questioned why the DAO was not consulted before this fee routing was implemented.

Aave Labs defended its position, stating that front-end components, including website and application interfaces, have always been under its purview. The company claimed it funded the development of the "adapters"—the code enabling the CoW Swap integration—and distinguished this from protocol-level changes (like interest rate policies) which remain subject to DAO governance.

The response failed to quell community outrage. Several DAO members countered that the Aave DAO funded the development of the original adapter technology, so the revenue should rightfully flow back to the DAO. Marc Zeller, founder of the Aave-Chan Initiative delegate platform, called the fee diversion "extremely concerning" and an "unacceptable" act where "Aave Labs, in the pursuit of their own monetization, redirected Aave user volume towards competition."

The controversy highlights deeper tensions. Critics, including venture partner Louis, view this as a "clear attack" on tokenholders and warn that a "competing, independent equity vehicle" poses the biggest long-term threat to any token and DAO. This follows Aave Labs' earlier proposal for a tokenization product, Horizon, which was rejected by the DAO earlier this year.

Despite the governance storm, Aave's native token (AAVE) price remained range-bound around $200 in the past week, seemingly unaffected by the debate. The protocol itself continues to see substantial activity, with on-chain data from Blockworks Research showing over $15 billion in net deposit flows during Q3 2025.