Aave Proposes V4 Upgrade and Full Revenue Alignment with DAO

• Aave V4 launch aims to expand revenue streams and speed up new feature rollouts for both retail and institutional users.

• All fees from Aave-branded products will go to the DAO treasury, aligning incentives and funding protocol growth.

• Aave Labs requests $25M + 75,000 AAVE for development, marketing, and product launches while protecting the brand.

Aave Labs is making a bold move to cement its position as DeFi’s leading lending protocol. The team submitted a Temp Check proposal urging the Aave DAO to adopt Aave V4 as the protocol’s core architecture. Additionally, the proposal requests that 100% of revenue from Aave-branded products, including aave.com and Aave App, flow directly to the DAO treasury.

Aave Labs is also seeking a one-year funding amount of $25 million in stablecoins and 75,000 AAVE tokens for its development, product launch, and marketing activities. The objective is quite clear: faster growth while maintaining a DAO-centric decision-making culture.

The proposal argues that there was a vision to rethink decentralized lending and now Aave has a 60% market share in DeFi lending. However, the team said, “the opportunity ahead of us, however, is bigger than anything behind us.”

Through the centralization of revenue streams via the DAO and the ratification of V4, Aave is attempting to align the incentives, preserve the brand, and open new revenue streams. This includes the expansion of institutional services, the Aave Card, the Aave Kit for enterprises, and the Aave Horizon platform for real-world asset markets.

V4 Architecture and Revenue Expansion

Aave V4 introduces modular Spokes, allowing rapid feature deployment without altering the core protocol. This flexibility enables higher monetization from new risk parameters and markets. V4 also includes a reinvestment module to optimize idle liquidity, potentially generating additional revenue for the DAO.

The protocol layer already produces over $100 million in annualized revenue. With V4, Aave expects to diversify and increase revenue streams across retail and institutional products. Consequently, the DAO could fund protocol growth, development, and security more sustainably.

The side effect of all product revenue going to the DAO is that Aave Labs needs to be separately funded for operations. The grant structure proposed is an upfront payment of $5 million, $20 million streamed over a year, and 75,000 AAVE vested over two years. Further launch-specific grants provide additional resources to Aave App, Aave Pro, Aave Card, and Aave Kit for user acquisition, marketing, and development. Besides just securing financial backing, this allows Aave Labs greater autonomy to make agile product decisions.

Brand Protection and Market Access

Aave Labs proposes creating a Foundation to hold and protect Aave trademarks, ensuring legal stewardship aligns with DAO-approved parameters. Additionally, the team plans to expand $AAVE’s market access via regulated futures and exchange-traded products, targeting institutional investors. This dual focus on brand protection and market expansion reinforces Aave’s position as core infrastructure for global finance.