Lending Protocol Aave Experiences Governance Conflict After Christmas, Founder Stani Kulechov Proposes “Off-Protocol Revenue Sharing” Governance Plan on January 3rd to Turn the Tide and Set Aave on a Dividend Path.
(Background recap: AAVE internal conflict intensifies: second-largest whale liquidates and admits to losing millions of dollars, dropping 20% in a week)
(Additional background: Aave community sparks controversy over “hidden privatization”: fee income flowing into Aave Labs address instead of DAO treasury)

Table of Contents

• Founder: Returning Cash Flow to Tokens
• Different Paths of DeFi Giants, Same Goal
• Main Reason: Regulatory Environment Becomes Friendlier

In December last year, Aave’s governance platform saw intense debates, with token holders questioning why Aave Labs was collecting all frontend fees and new product revenues into the team’s account. Ultimately, a proposal to reclaim brand control was rejected with 55% opposition, causing AAVE’s price to fall 10% that day.

This internal governance dispute could have led to long-term internal friction, but the “off-protocol revenue sharing” idea proposed by founder Stani Kulechov on January 3, 2026, marked a turning point in the event.

Founder: Returning Cash Flow to Tokens

Aave founder Stani Kulechov stated in a lengthy post on the governance forum that going forward, any high-value products developed independently by Aave Labs and decoupled from the core protocol will share profits with AAVE holders. Especially targeting the institutional-grade services for the $500 trillion real-world asset (RWA) market, which is seen as having the most profit potential.

Stani Kulechov is essentially telling the community that development autonomy remains with Aave Labs, but cash flows will be funneled into tokens to benefit holders.

We are committed to sharing income generated outside the protocol with token holders. Coordinating demand is important for us and AAVE holders. We will soon follow up with a formal proposal detailing how the cash flow will operate.

If this idea materializes, on-chain profit-sharing records will be difficult to falsify, shifting Aave’s governance focus from who can modify code to how much revenue token holders can receive each quarter.

Different Paths of DeFi Giants, Same Goal

Currently, DeFi profit-sharing generally follows three routes. For example, Aave adopts a holding company model, where Aave Labs acts like a subsidiary generating revenue, and the underlying tokens share in the profits.

Another example is MakerDAO, which uses Sky’s governance structure to profit from the protocol by repurchasing and burning MKR on the secondary market, indirectly increasing the net asset value per token, while also offering deposit rates to attract capital and create a snowball effect.

Then there’s Curve, which leverages power leverage: veCRV holders control CRV emission flows, and external projects pay “bribes” to secure emission quotas. Token holders profit from these bribes. Although not a direct dividend model, it essentially captures cash from outside sources.

The common goal behind these three paths is simple: large DeFi protocols no longer operate governance narratives solely to boost market attention but aim to convert valuation into calculable cash flows, attracting token holders and maintaining the flywheel.

Aave’s new plan articulates this point clearly, aligning tokens with the equity concept of mature companies.

Main Reason: Regulatory Environment Becomes Friendlier

In the past, designing “dividends” in DeFi was very likely to cross regulatory red lines, because the US SEC classified any “profit distribution based on holding proportion” protocol mechanism as within securities law, forcing projects to design more complex incentive mechanisms.

However, since Trump’s return to the White House in 2025, regulatory officials have adopted a friendlier stance toward the crypto industry, indirectly granting regulatory exemptions and easing restrictions on DeFi. Market observations show that enforcement focus has shifted to combating scams and illegal fund flows, with profit distribution of large protocols left largely unperturbed—effectively an indirect encouragement. Meanwhile, traditional financial markets are also beginning to integrate with DeFi. Aave’s profit-sharing proposal is seen as a strategic move in this context, occupying a position during the policy gap.

If future regulations tighten again, Aave can also decentralize profit-sharing logic to the DAO, leaving Aave Labs as only a development service provider, reducing securities risks. This approach provides a reference model for many other protocols.

On-chain data shows that Aave’s current total value locked (TVL) is approximately $33 billion. Assuming new products generate 1% annualized profit with a 30% profit-sharing ratio, roughly $10 million in cash flow could be released annually. For token holders, this already hints at a “price-to-earnings” ratio. AAVE tokens have also risen about 10% in the past 24 hours, currently trading at $165.