TL;DR:
- Aave Labs integrated CoW Swap, allegedly diverting 15 to 25 basis points in fees that previously went to the DAO.
- Key Aave delegates denounce “stealth privatization” of the brand and revenues generated by the DAO.
- Aave Labs defends itself, claiming the interface is its own “product” that it is entitled to monetize.
Aave, the largest DeFi lending protocol by Total Value Locked (TVL), is once again embroiled in controversy. Through an open letter, delegate EzR3aL reported that the partnership between Aave Labs and CoW Swap diverted fees that were previously intended for the treasury of the Decentralized Autonomous Organization (DAO).
For context, previously, swaps performed through the Aave Labs frontend used a ParaSwap adapter. The surplus funds generated by this operation were donated to the Aave DAO treasury.
In this context, delegate EzR3aL denounces that the DAO is not receiving the “extra fees… ranging from 15 to 25 basis points (bps)” resulting from the new Aave Labs CoW Swap integration.
The last weekly fee transfer received by the DAO was valued at 46 ETH, equivalent to over $150,000 USD. The analysis cited in the post indicates that the fees collected by the DAO have noticeably dropped since CoW Swap was partially integrated in June.
Last week, Aave announced that CoW Swap would handle all in-platform swaps, promising “better prices… and protection against MEV attacks.” This integration allows users to repay borrowed positions, swap collateral, or change their debt positions.
Front-End Monetization vs. DAO Alignment
The points raised by EzR3aL have led the Aave community to question Aave Labs’ actions. Marc Zeller, of the influential Aave Chan Initiative (ACI) delegation, called the move “extremely concerning,” claiming that it amounts to “stealth privatization… leveraging brand and IPs paid for by the DAO.” Zeller mentioned a “tacit relationship” with Aave Labs and felt “fooled” after helping with development “in good faith.”
In the forum where the letter was published, members described the move as an “unforced error” and accused Labs of “mis-alignment.” For its part, Aave Labs defended itself, explaining that these integrations sit “entirely outside the protocol the DAO stewards” and that the front-end interface — which it “funds, builds, and maintains” — is a “product, not a protocol component.”
On the other hand, Stani Kulechov, founder and CEO of Aave, clarified that Aave Labs decided to “build these [CoW Swap] adapters, fund the development ourselves and eventually integrate into our own application to provide a better experience.” Kulechov concluded that it is “perfectly fine for Aave Labs to monetize its products,” referring to the interface.
The dispute over the Aave Labs CoW Swap integration underscores the tense boundaries between the decentralized protocol, which has a TVL of $34 billion, and the corporate entity that develops and maintains its user interface.
