The governance struggle behind the Aave DAO and Aaave Labs Power Game
Author:Sunsu and Defi
The recently noisy Aave DAO vs Aave Labs, a dispute over governance power on both the protocol and product levels, is behind the industry-wide governance dilemma. Combine this question. Who the hell is Aave's master
1/6 Cause of events
Aave Labs replaced ParaSwap, which integrated the front end, with CoW Swap, and the resulting costs went to Labs' private address. The anonymous DAO member EzR3aL brought the matter to the attention of the Governance Forum, accusing Labs of “privatization” of the value of the agreement, and Labs took the position that it belonged to the front end and product layer of revenue, to Labs and not to the core of the agreement。
- Let's start with Aave DAO and Aave Labs
- DAO for Protocol
- Labs for Project
The core dispute is whether Aave is a Protocol or a Project? and the impact on the right to proceeds。
Aave DAO understands that it is a unique governance organization of the Cripto world, composed of holders of $AAVE coins who exercise power in DAO organizations. Almost 90 per cent of encryption projects are under this structure, as is the definition of “governance token”. Its greatest authority is to vote on project proposals and to determine whether a project is being updated and developed and where it will go。
Aave Labs is a development team responsible for the construction, updating and maintenance of the agreement. (e.g. front-end interface, moving App) They usually also maintain the brand name and IP of Aave, so in social media and on the market it is usually accepted that Aave Labs is Aave. Its founders are also influential in social media。
Generally speaking, Aave Labs and Aave DaO need to work together. Labs, for example, develop a number of development programmes, optimize certain functions, or even upgrade V3 V4, which are dominated by Aave Labs, but ultimately determined by DAO. Usually, the two are mutually supportive in the same direction of interest and form Aave together。
• What core resources do they control separately
In the event of a conflict of interests, it would also be possible to remove the two roles, since they are themselves two separate individuals, looking at the core resources and the authority of each:
Aave DAO controls the bottom cores, such as smart contracts, and the control of the treasury is in the hands of DAO, and although Labs can propose development options, they need to vote through DAO. So it's Protocol, and the upper layer can work on any product and theoretically build multiple front-end products on a Protocol, Aave? All right。
Aave Labs masters the front end, brands, product marketing, partners. So it communicates directly with users, and he represents a good product。
So it is widely held by Labs' supporters that the integration of CoW Swap is a front-end act that has nothing to do with Aave's bottom structure, and even Labs can decide unilaterally not to integrate, and that the revenue generated is naturally owned by Labs. Corresponding DAO supporters consider this to be a form of looting, since with the existence of AAVE governing tokens, all interests should flow first and foremost to AAVE holders or remain in the public treasury to be determined by DAO voting. Prior to this, ParaSwap's income would continue to flow to DAO, and the new CoW Swap integration changed the situation, making it more likely that DAO considered it a plunder。
The two are consistent。
4/6. Governance dilemma
This reflects a more awkward governance and power dilemma, which, from the perspective of the holders of the $AAVE, is usually on the side of DAO, because the entry of income into the treasury is in the interest of currency holders, while Labs, with corresponding annual expenses, can report through DAO, as if community power were gradually being eroded, if it was possible to make a separate profit。
But from the point of view of Aave Labs, although the theoretical core control is in DAO, and the programme will ultimately be implemented after voting, Labs is a global role position from the first version of Aave to the present, which has contributed significantly to the growth of the project. As Stani said, "If it hadn't been for 2018-2019, Emilio had convinced me to follow the design directions of the Aave agreement, and we were still doing ETHLend, and I thought that Aave would never have existed."
Who's the real owner of Aave。
5/6. Power disputes
This governance dilemma exists in most projects, and governance tokens are bought in real money and silver. Ideally, these holders decide the future of the project together, even forcibly replacing Labs when the team no longer holds the vote。
But there is a big difference between reality and ideality, even where there is a certain market share, and when problems, disputes, and farces occur within the team, the market will inevitably be lost. Sushi is a good example. DAO can exercise power, and the project can be replaced, although thanks to the design of smart contracts, even if there is a big blood change in a project, the existing stability can be preserved perfectly at the product level. In past cases, however, the consequences of the division are usually bad。
The central problem here is that, for the time being, the nature of DAO is a decentralized organization, which, although it has the right to vote, is difficult to function efficiently, and that there may be independent developers, VCs, large households in the community, and once each role begins to fully exercise its powers, a proposal may experience repeated development, modification and games from the outset. The success of a project requires professional teams and continuity, and DAOs can hire new teams, but may find it difficult to connect quickly and interchangeably and easily lose their market position. So the existence of Labs is more like an entity that can “control” the agreement (need to work with DAO)。
For my part, I would prefer to end up with a formula that balances the distribution of benefits. But everything is under discussion and there is no governance vote. The potential danger behind this is that, even when reconciliation is finally achieved, the incident has revealed a divergence of expectations between the founding team and the currency holders。
In the long run, I still look forward to Aave’s development, because it is a few DeFi projects that have been certified by the market as having a strong moat, and the contradiction of governance power is an industry-wide problem, and how Aaave managed this incident, which could be a model case in the future。
6/6. Sound and discussion
In a fight, Emilio believed that someone was maliciously demeaning the contribution and value of Ave Labs. Members of the ACI team noted that Aave Labs had tried to use DAO on several occasions and had been exposed。
Community members' recommendations to Labs:
- In the future, Labs should announce in advance that their construction revenues will flow to Labs rather than DAO。
- Or a clear definition of the income-sharing ratio between DAO and Labs。
- Establish transparency pages on the main Aave website or on the Labs website to provide clear information to help judge investors interested in $AAVE coins (especially institutions or funds)。
Despite the controversy surrounding the DAO model, Aave DAO ' s token holders are the most active and vocal group, demonstrating the vitality of their communities. The front end, website and application are at the centre of the controversy, and there is a tendency for the term to be used in isolation and lack of clarity。
Some of the allegations made by Zeller about Labs extracting the value of the agreement:
The projects listed (Portals, Credit Delegation Vault, Lens, etc.) do show that many of Aave Labs ' exploratory initiatives have not been directly translated into income or significant rates of adoption of the agreement。
THE V4 VERSION WAS ALSO MENTIONED, WITH DAO SPENDING $15 MILLION SO FAR AND UNCLEAR VALUE PROPOSITIONS COMPARED TO THE V3 MOBILE MOAT, EXPRESSING CONCERN ABOUT WHETHER THIS WAS A NEW REVENUE TRAP。
In the process of innovation, failure is inevitable. Not every function or product can succeed. To some extent, DAO is investing in the R & D capacity of Aave Labs, and I understand that Zeller is not denying contributions, but calling for higher standards of accountability, transparency and alignment of values。
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