In a space where protocols rug, founders disappear, and blue-chip DeFi becomes a meme every bear market, @aave just keeps doing the job it was designed to do.
Since 2017, Aave has gone from a $16 million token sale to commanding more than 60% of the DeFi lending market share. That's absolute dominance.
While other protocols were busy imploding (RIP Terra, Celsius, BlockFi, and the graveyard of other short-lived projects), Aave just kept building. No major hacks. No rug pulls. No founder drama.
The protocol has been battle-tested through multiple market cycles, continues to facilitate billions in loans, and remains relevant for all the right reasons.
So when Aave Labs drops a proposal asking for $50 million, you shut up and actually listen. Because, unlike 99% of crypto, they've earned the right to ask.
Without any ado, let’s get into the details of it.
What does the ‘Aave Will Win’ proposal entail?
If you’re a listener, here’s a quick video sum-up.
TLDR: Aave Labs just dropped what might be the most ambitious proposal in DeFi governance history. It's basically asking the DAO, "Hey, give us $50 million, we'll give you all our product revenue, and together become the core infra for decentralized finance."
Reading between the lines
The proposal chalks out an operational reset for Aave. There are four main components/pillars that you need to be aware of.
1. Revenue direction
Aave has a pretty comprehensive product suite. Some products are already rolled out, while others are being refined and will be put to sea in the foreseeable future.
aave.com, Aave App (scroll down to the degen corner section), Aave Card, Aave Pro, Aave Kit, Aave Horizon (RWA market) - everything falls under the Aave umbrella.
If approved, 100% of the revenue these products generate will flow to the DAO treasury instead of Aave Labs' pockets.
Aave Labs isn’t building a parallel business empire; they’re all-in on the DAO. Direct alignment.
That being said, you also need to keep in mind that they’ve defined revenue as gross product revenue minus external partner revenue sharing.
This means, if they're cutting deals with partners and subsidizing user growth, those costs come out before the DAO sees anything. The "100%" comes with asterisks.
2. Brand protection
Currently, Aave Labs owns the Aave trademark. This is not ideal for decentralization, but legally necessary (b/c DAOs can't own IP).
Aave Labs has proposed the creation of a Foundation to hold the trademarks, operate under DAO-approved rules, and protect the brand from bad actors.
If you’re wondering why you should care about the branding as an investor, remember that your Aave tokens are only as valuable as the Aave brand.
If anyone can slap ‘Aave’ on a scam product, the whole ecosystem suffers. Someone needs to enforce trademark rights and sue the imitators.
3. V4 as the core technical foundation
This is the big one. V3 is great, but it's architecturally maxed out.
Every new feature requires touching core protocol logic, which means extensive audits, high costs, and slow iteration.
Enter V4.
V4 is a superset of V3. Everything V3 can do, V4 can do better. Nothing will be lost in the upgrade.
V4's standout feature? The Spoke architecture.
Instead of modifying the core every time you want new functionality, you just build a new Spoke that plugs into the hub.
Want a perps market? Build a Spoke.
Want to direct idle liquidity into T-bills? Build a Spoke.
Want cross-chain isolated lending markets? Build a Spoke.
Each Spoke can have its own revenue model. The proposal chalks out some wild opportunity estimates:
The migration plan: V3 will not get shut down hastily. The transition will happen in three phases:
4. Growth framework
Aave Labs is asking for:
$25 million in stablecoins ($5 million upfront, $20 million streamed over a year)
75,000 AAVE tokens (unlocking linearly over 2 years)
Product launch bonuses:
$5 million for Aave App launch
$5 million for Aave Pro launch
$5 million for Aave Card launch
$2.5 million for Aave Kit launch
In total: ~$42.5 million in stables + 75k AAVE (worth ~$9.3 million at current prices)
All funds will be spent on Aave-related efforts.
Historically, Aave Labs self-funded most of this through product revenue. If 100% of that revenue now goes to the DAO, someone needs to pay for the engineers, marketers, and bizdev folks.
That someone ought to be the DAO.
Why this matters?
If the proposal gets approved and executed well, it'll be an absolute game-changer.
1. Revenue diversification
Right now, Aave makes ~$100 million annually. If even half of those V4 Spoke opportunities materialize, we're talking about a protocol generating $300 million to $500 million in annual revenue.
That's real, sustainable treasury income that doesn't rely on token emissions or VC funding rounds.
2. Competitive product layer
Crypto is moving fast. Fintechs are entering DeFi. Institutions are coming onchain. Regulatory clarity is gradually emerging.
The protocols that’ll win will be those with:
Best tech (V4 ✓)
Best UX (Aave Pro, App ✓)
Best distribution (institutional partnerships ✓)
Fast execution (autonomous Labs team with proper funding ✓)
3. Market access for AAVE
The proposal mentions supporting partners to launch:
Regulated AAVE futures
Spot ETPs (exchange-traded products)
In fact, this very minute, my screen buzzed with a notification that Grayscale has filed to launch an AAVE ETF.
When TradFi can buy AAVE in the same-old TradFi way, it sure will unlock a new tier of legitimacy and liquidity.
A few things to note
In the proposal comments section, a few of cautionary bells are ringing.
1. The governance capture concern
By demanding 75k tokens, community folks feel Aave Labs is tring to manufacture legitimacy because AAVE tokens translate to voting power.
@AaveChan's @Marczeller recently published an analysis showing how wallets connected to Aave Labs voted against the Mandatory Disclosures proposal.
This proposal called for disclosure of wallets and abstention from conflicts of interest. It ultimately got rejected. I mean, this ain’t healthy governance.
2. The ask is HUGE
$50 million is not a small ask. For context:
That's more than most DeFi protocols make in total revenue annually
It's a multi-fold increase from Labs' historical DAO funding requests
They're essentially asking for a blank check in exchange for quarterly reporting w.r.t. progress
The Aave DAO treasury holds $160.9 million, down $44.8 million last month due to market fluctuation. Of that, $100.6 million is non-AAVE assets, and $60.2 million is AAVE tokens.
Zeller highlights,
“The stablecoin ask alone is 42% of the DAO's non-AAVE reserves. The total ask of $50 million is roughly 31.5% of the entire treasury. For a single service provider. In a single vote.”
What if they just… don't deliver? The DAO has very little recourse beyond "don't fund them next year." By then, the $50 million will be gone.
3. ‘Net revenue’ could be anything
The proposal defines revenue as gross product revenue minus external partner sharing, subsidies, and user incentives.
The problem here is that Aave Labs retains discretion to redirect product inflows (like vault yields) directly into user incentives to compete without waiting for governance cycles.
They can spend treasury money on growth without asking permission, as long as they call it ‘user incentives.’ How much? We don't know. It'll be disclosed only in their quarterly updates.
4. The Foundation isn’t defined yet
“We'll create a Foundation to hold the trademarks” is great in theory. But the actual structure, governance, conflicts policy, and enforcement mechanisms? That's all TBD in a follow-up proposal.
It feels like we’re somewhat being asked to approve the framework before seeing the fine print.
5. V3 might get abandoned too fast
The plan says "pause any new features for V3 if this framework is passed." But what if V4 has bugs? What if adoption is slower than expected? What if users don't want to migrate?
Once you stop building on V3, you've effectively picked a winner before the market has.
What to expect next
If this temp check passes (and let's be real, it probably will), expect:
1. Rapid product launches
Aave App, Pro, Card, Kit - all these products will roll out faster than you can say "user acquisition budget.”
2. V4 mainnet in Q2-Q3 2026
The code is already on testnet, audits are happening, and the pressure to launch is building up.
3. More revenue, more complexity
With Spokes come new attack vectors, new regulatory questions, and new competitive dynamics.
4. Copycat proposals
Other service providers will 100% use this as a template: "We'll give you all our revenue if you fund our operations at scale."
5. Governance evolution
This could become the go-to handbook for mature DAO-Labs relationships… or it could be a cautionary tale. Guess, time will tell.
Zooming out
Here's the thing: DeFi is still a tiny sector when compared to traditional finance. Aave has ~$27 billion in TVL. That's merely a rounding error for a major bank.
The question isn't "Is Aave big enough?" It's "Can Aave scale to become core infra for the onchain economy?"
If the answer is yes, they need better tech, bang-on products, institutional tie-ups, and sustainable funding.
This proposal is trying to build that entire stack in one go.
It's ambitious. It's risky. It's expensive. It's also probably necessary if Aave wants to compete with the next wave of well-funded crypto-native and TradFi-native competitors.
Call us biased, but we’d love to see Aave win.
At the end of the day, a win for Aave will be a win for all of us.
✍️ @lavinablocmates
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