--- title: "Aave DAO" url: "https://caper.network/wiki/daos/lending/aave-dao" updated: 2026-09-06 license: CC-BY-4.0 license_url: "https://creativecommons.org/licenses/by/4.0/" --- # Aave DAO | | | | --- | --- | | **Name** | Aave DAO | | **Type** | Protocol DAO (lending / money market) | | **Governance token** | AAVE (migrated from LEND at 100:1, October 2020; 16M supply) | | **Governance model** | [Token-weighted](/wiki/dao-governance/concepts/voting/token-weighted-voting) on-chain voting via Aave Governance V3 + separable delegation | | **Treasury** | On-chain Collector contracts; among the largest DAO treasuries (track live on DeepDAO) | | **Notable for** | Largest DeFi lending protocol by TVL; the GHO stablecoin; the 2025 "Aavenomics" buyback — cut in March 2026 and [paused by vote on 1 May 2026](https://snapshot.box/#/s:aavedao.eth/proposal/0x10a2af0110b1ad6f4afd7a3a052b2a119d102cc22949e80e9bbd5132587107c8) | | **Protocol version** | Aave V3 and Aave V4 in parallel; V4 activation on Ethereum mainnet [approved by the DAO](https://governance.aave.com/t/arfc-aave-v4-activation-on-ethereum-mainnet/24293) in March 2026 | | **Primary sources** | [aave.com/docs](https://aave.com/docs), [governance.aave.com](https://governance.aave.com/), [governance portal](https://app.aave.com/governance/) | | **Related** | [Uniswap DAO](/wiki/daos/dexs/uniswap-dao), [Arbitrum DAO](/wiki/daos/networks/arbitrum-dao), [What is a DAO?](/wiki/dao-governance/concepts/fundamentals/what-is-a-dao) | The **Aave DAO** governs [Aave](https://aave.com/), a decentralized, non-custodial liquidity protocol where users supply assets to earn yield and borrow against overcollateralized positions. Deployed across more than a dozen EVM networks — and, since the DAO approved V4 activation on Ethereum mainnet in March 2026, across **two protocol generations at once**, with V3 and V4 instances running side by side while V4 deployments are voted through chain by chain — Aave is consistently the **largest lending protocol in DeFi by total value locked** — several times the size of its nearest competitors; the live figure is tracked on [DeFiLlama](https://defillama.com/protocol/aave). Control over the protocol's parameters, its markets, its treasury, and its native stablecoin rests with holders of the **AAVE** token, who decide by [token-weighted](/wiki/dao-governance/concepts/voting/token-weighted-voting) on-chain vote. ## Origins and the AAVE token Aave began as ETHLend and its LEND token. In 2020 the project rebranded to Aave and, after its first governance proposal, **migrated LEND to AAVE at a 100:1 ratio** (100 LEND → 1 AAVE), going live in October 2020 with a fixed supply of **16 million AAVE** — 13 million from the migration and 3 million placed in an Ecosystem Reserve. AAVE (together with staked stkAAVE and aAAVE) confers proportional voting power, and staking it backs the protocol's safety module against shortfall events. ([CoinDesk, 2020](https://www.coindesk.com/tech/2020/07/29/defi-lender-aave-rolls-out-governance-token-on-path-to-decentralization)) The strength of Aave's markets also seeded a wider ecosystem: [Morpho](/wiki/daos/lending/morpho) launched in 2022 as a peer-to-peer optimizer layered on top of Aave and [Compound](/wiki/daos/lending/compound-dao) before shipping its own immutable lending primitive. ## Governance V3 and the proposal lifecycle **Aave Governance V3** is a modular, multi-chain system: a Core network (Ethereum mainnet) holds voting power, low-cost Voting networks tally votes via storage proofs, and Execution networks implement approved payloads across chains, all wired together by the Aave Delivery Infrastructure (a.DI). Holders can **delegate voting power and proposition power separately** to different addresses. A change moves through a defined [lifecycle](/wiki/dao-governance/concepts/voting/proposal-lifecycle): forum discussion, a non-binding **Temp Check** (Snapshot poll), an **ARFC** (Aave Request for Final Comments) with service-provider review, and finally an on-chain **AIP** (Aave Improvement Proposal) — an IPFS-stored metadata file plus an executable payload — that must clear quorum before executing behind a one-day or seven-day timelock. Two emergency multisigs — a Protocol Guardian and a Governance Guardian — can pause markets or veto a malicious payload. ([Aave docs: Governance](https://aave.com/docs/ecosystem/governance); [proposal process](https://aave.com/help/governance/proposals)) ## GHO — the DAO's own stablecoin In July 2023, following a near-unanimous governance vote, the DAO launched **GHO**, a decentralized, overcollateralized, USD-pegged stablecoin minted directly by borrowers who post collateral in Aave markets. GHO is **fully governed by the DAO**: governance sets its interest rate, approves the "facilitators" allowed to mint it, and caps their bucket sizes — and **100% of the interest paid on GHO flows to the DAO treasury**, turning the stablecoin into a first-party revenue line rather than a fee handed to a third party. ([Aave docs: GHO](https://aave.com/help/gho-stablecoin/gho)) ## Aavenomics — turning fees into token value For years AAVE conferred votes but no direct claim on protocol revenue. That changed with **"Aavenomics,"** a 2025 tokenomics overhaul that routes surplus revenue back to the token. It introduced a **"Buy and Distribute"** program that buys AAVE from the open market and moves it to the Ecosystem Reserve; **Anti-GHO**, a non-transferable reward minted from GHO revenue and burnable against GHO debt; and **Umbrella**, a redesigned safety module covering bad debt on core assets. In April 2025 the buyback became a standing programme of roughly $50m a year, and by the DAO's own accounting it had bought over **205,000 AAVE — 1.28% of supply** by early 2026. What usually gets left off is what happened next, and it happened in two steps, both on the record. In March 2026 tokenholders [voted to cut the budget from about $50m to about $30m](https://snapshot.box/#/s:aavedao.eth/proposal/0xe1f47bd04001269432d2e74e76b79747e1458e90b0e3b2cdee7be6495d96e056) (363,253 AAVE for, 3,199 against), the [ARFC](https://governance.aave.com/t/arfc-buyback-program-budget-adjustment/24229) citing borrow-fee revenue down roughly 25% from its peak — $7.95m in January 2026 against $13.5m a year earlier — against an optimistic 2026 operating budget of $190m. Then it stopped entirely: after the **rsETH bridge exploit of 18 April 2026** put unbacked rsETH into Aave V3 markets on several chains, buybacks were [halted on 19 April](https://governance.aave.com/t/arfc-pause-aave-buybacks/24686) and the pause was [ratified by vote on 1 May 2026](https://snapshot.box/#/s:aavedao.eth/proposal/0x10a2af0110b1ad6f4afd7a3a052b2a119d102cc22949e80e9bbd5132587107c8) (617,169 for, 4,893 against). **No restart has been put to a Snapshot vote since**, checked against the [aavedao.eth space](https://snapshot.box/#/s:aavedao.eth) on 6 September 2026. Aave is still the clearest case in DeFi of the shift from pure governance tokens toward [value-accruing](/wiki/daos/dexs/uniswap-dao) ones — and also the clearest case of how conditional that accrual is, since what suspended it was an incident on the protocol's asset side rather than any change of mind about the policy. ([Aavenomics ARFC](https://governance.aave.com/t/arfc-aavenomics-implementation-part-one/21248); [buyback update](https://governance.aave.com/t/arfc-aave-buybacks-program-an-update/23290)) ## The service-provider model The Aave DAO does not employ staff directly; it funds work through **service providers** — independent risk, finance, development, and delegate teams paid from the treasury by governance vote. Notable contributors include the founding company **Avara / Aave Labs** (which builds the core protocol), the delegate-and-steward **Aave Chan Initiative**, technical teams like **BGD Labs**, and risk providers such as **Chaos Labs**. Crucially, the DAO is not Aave Labs: Labs must request funding like any other provider, a separation that became visible in 2026 when BGD Labs announced its departure amid a public dispute over Aave Labs' roadmap and accountability, even as the DAO moved to fund Labs directly and at scale. The instrument is the **Aave Will Win Framework**, an [ARFC](https://governance.aave.com/t/arfc-aave-will-win-framework/24352) that passed on 4 April 2026 with 901,901 AAVE voting. It is a trade, stated plainly in the proposal: Aave Labs directs **100% of the revenue from its Aave-branded products** to the DAO treasury — the aave.com swap integration alone was put at $12–24m a year — commits to protecting the Aave brand and IP, and in return receives a one-year primary grant of **$25m in stablecoins plus 75,000 AAVE** ($5m up front, then $5m over six months and $15m over twelve), with further milestone grants tied to specific products. The proposal's own justification for the size is the consolidation: Labs "would absorb the majority of responsibilities previously handled by BGD Labs and ACI," two providers it costs the DAO about $7.4m a year in stablecoins plus 9,450 AAVE between them. That is a real change of shape, not just a bigger cheque. A DAO that funded a plural set of independent providers is concentrating development, delegate stewardship and product revenue in one company on a twelve-month accountability clock — which sharpens rather than resolves the tension above, because the counterweight to a closely-associated development company has historically been the other providers. ## How Caper approaches this Aave spent years retrofitting value accrual onto a token that originally carried none, and it coordinates a sprawling set of service providers through discretionary treasury grants. A [caper](/wiki/foundations/what-is-a-caper) starts from the other end: funding flows through an on-chain [bonding curve](/wiki/markets/bonding-curve) into a shared treasury from day one, and every deployment of that treasury is a bounded [PAYOUT or INVEST proposal](/wiki/governance/proposals) rather than a standing budget — with a member's economic claim realized directly at [exit](/wiki/foundations/leaving-a-caper), sized by the same weight that decides their vote. The mechanics are described neutrally on those Caper pages. ## References - [Aave documentation](https://aave.com/docs) — protocol and governance reference. - [Aave Governance Forum](https://governance.aave.com/) — where ARFCs and AIPs originate. - [Aave docs: GHO stablecoin](https://aave.com/help/gho-stablecoin/gho). - [Aavenomics Implementation, Part One](https://governance.aave.com/t/arfc-aavenomics-implementation-part-one/21248) — the 2025 buyback / Anti-GHO / Umbrella package. - [DeFiLlama: Aave](https://defillama.com/protocol/aave) — live total value locked.