Firestorm erupts in Aave governance forum over CoW Swap fees

A dispute between the Aave decentralized autonomous organization (DAO), which governs the Aave decentralized finance (DeFi) protocol, and Aave Labs, the main development company for Aave products, over fees from the recently announced integration with decentralized exchange aggregator CoW Swap, continues to flare up.

The issue was raised by pseudonymous Aave DAO member EzR3aL, who said that the fees generated by crypto asset swaps using CoW Swap were going to a different onchain address, not the treasury of the Aave decentralized autonomous organization.

Instead, the fees are going to a private address controlled by Aave Labs. EzR3aL raised several questions, including why the DAO was not consulted before the fees were routed, and argued that the fees belong to the DAO.

The governance forum post that sparked the debate. Source: Aave Governance

“Another entity, rather than the Aave DAO, is receiving at least $200,000 per week worth of Ether,” EzR3aL said, adding that this amounts to $10 million of potential annual revenue kept from the DAO.

Aave Labs responded that the front-end components for the website and application interfaces have always been the rightful purview of Aave Labs.

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Protocol-level changes, like interest rate policies and approving changes to smart contract code, have always been subject to the DAO’s stewardship, Aave Labs said.

Aave Labs also claimed that it was the entity that funded the development of the “adapters,” the lines of code that allow swaps and other integrations to work.

The total value locked in the Aave protocol and a financial overview of the DeFi platform. Source: DeFiLlama

However, the response did little to curb the tension, with several DAO members saying that the Aave DAO funded the development of the original adapter technology; therefore, the revenue from the integration should flow back to the DAO.

Marc Zeller, the founder of the Aave-Chan Initiative, a delegate platform serving the Aave governance community, said the decision to route the fees exclusively to Aave Labs is “extremely concerning.”

“Aave Labs, in the pursuit of their own monetization, redirected Aave user volume towards competition. This is unacceptable,” Zeller said.

Cointelegraph reached out to Aave Labs but did not obtain an immediate response by the time of publication.

The conflict highlights the complexities of running a DAO, which is a novel form of governance and organization that has benefits over traditional business structures but also brings its own unique challenges.

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