What to know:
- Aave now routes 100% of swap and Horizon fees to its DAO treasury
- The change enhances protocol-level revenue capture
- Horizon expands Aave’s exposure to RWA and institutional markets
- The update is part of the “Aave Will Win” governance strategy
The protocol of Aave has recently implemented a new change wherein all fees collected from swap and horizon services will now go directly into the DAO treasury of the DeFi protocol. This move by the altcoin signifies its attempts to secure greater financial stability for itself and exposure to new markets like RWAs.
Fee Routing Update: 100% to DAO Treasury
In the new arrangement, any fees earned by the DeFi protocol as a result of swaps or Horizon operations shall be channeled directly to the treasury of the DAO.
In the previous system, some portion of these earnings was divided between different parties. With all the fee proceeds going to the DAO’s treasury, the company is guaranteed the benefit from its ecosystem’s revenue streams.
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Expansion of Revenue Streams
The update fits the altcoin’s plan to diversify its revenue base outside conventional lending platforms. The Horizon, which emphasizes institutional and RWA use cases, presents new avenues for generating revenue.
Taking into consideration the swap fees and Horizon fees, it aims to leverage its potential through institutional loaning requirements, real-world tokenized assets, and additional Defi product layers.
Governance and the “Aave Will Win” Framework
The proposed solution forms part of the greater effort at the DeFi protocol titled “Aave Will Win,” aimed at value capture and sustainability in the long run.
Key highlights are as follows:
- Routing all partner and protocol fees to DAO-controlled wallets
- Boosting transparency around revenue streams
- Aligning the interests of users, developers, and token holders
The aforementioned revenue allocation decision will be entirely governed by the community members.
Impact on AAVE Token and Ecosystem
Redirecting 100% of these fees to the treasury could have several implications:
- Strengthened treasury balance to finance further development and incentivize users
- Future potential for rewarding token holders or buying back tokens
- Enhanced appeal to institutional investors
It is difficult to estimate the short-term effect of such a change on the price of the altcoin, but there are definitely some long-term benefits.
Broader DeFi Implications
The DAO’s decision is part of an emerging trend whereby DeFi protocols are seeking to maximize their revenue streams and minimize leakage through intermediaries.
In light of stiff competition, DeFi protocols have been turning their attention to revenue models that promote sustainability, treasury expansion via DAOs, and RWAs and traditional finance integration. This might be indicative of a future trend for other leading DeFi platforms.
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