Aave Labs has backed down following the recent divisive governance vote.
On the 2nd of January, Stani Kulechov, head of Aave Labs, the ecosystem’s largest builder, announced that the company will share revenue with AAVE token holders.
Part of the statement read,
“Given the recent conversations in the community, at Aave Labs we are committed to sharing revenue generated outside the protocol with token holders.”
Source: Aave governance
He added that token ‘alignment was important’ to Aave Labs and that they’ll follow up with a formal proposal.
Additionally, he promised to address the branding or intellectual property (IP) ownership issue, which also featured in the concluded governance vote.
Reactions to Aave Labs’ U-turn
In December, the DAO, representing token holders and overseeing parts of the protocol, accused Aave Labs of diverting potential revenue away from the DAO.
Following this, the DAO issued further demands. It called for naming rights, protocol brands, and other intellectual property to be placed under DAO control. In addition, it insisted that revenue be shared with token holders through buybacks.
But Kulechov and Aave Labs campaigned against the proposal and voted it down. Amidst governance chaos and a lack of clear token alignment, the AAVE price dropped by nearly 20% and wiped out $500 million in market cap.
But Kulechov’s latest U-turn struck some renewed optimism. According to Simon Dedic, founder of VC firm MoonRock Capital, the shift was beneficial for the future of crypto. He noted,
“Slowly but surely, tokens turning into onchain equity. Keep this up and crypto’s future looks very bright.”
Another community member, Tochi, said the pivot would mean more token utility and alignment clarity as “revenue generated outside Aave protocol ends up in token ownership.”
On his part, Marc Zeller of the Aave Chan Initiative, the most vocal figure who opposed Kulechov during the concluded vote, also welcomed the move as being in the “right direction.”
However, he enlisted key areas that must be considered for ‘Aave to come out stronger.’
Source: Aave governance
AAVE price rebounds
That said, the AAVE price jumped 10% following the positive update and rose to $166 after consolidating around $150 for the past few days.
Further recovery may be confirmed if the 50-day Moving Average is flipped into support again.
Source: TradingView
Final Thoughts
- Aave Labs has made a U-turn after voting down the token alignment proposal in December.
- The community and token reacted positively to the shift, but the way forward on brand ownership was still unclear.