Aave Labs has proposed a major upgrade to its protocol, called Aave V4, and is requesting $25 million in stablecoins plus 75,000 AAVE tokens from its DAO to fund the development. The upgrade aims to enhance scalability, modularity, and liquidity management. A key feature is directing all revenue from Aave-branded products to the decentralized autonomous organization, aligning long-term incentives for token holders and preparing for wider institutional DeFi adoption.
**Aave Labs** has formally proposed an upgrade to the core architecture of its protocol, called Aave V4. The development firm is seeking $25 million in funding from the **DAO** to execute this plan.
The proposed V4 focuses on improving scalability and modular development for new financial instruments. It also aims to enhance liquidity management across the network.
A central component redirects all product revenue from Aave applications and tools to the DAO treasury. This shifts revenue away from the development company and to the token-holding community.
“The framework establishes Aave Labs’ position as a committed contributor to the DAO over the long term, based on a token-centric framework where 100% of product revenue is contributed to the community,” Stani Kulechov stated. He suggested this prepares the protocol for growth as institutions enter the DeFi space.
The upgrade is designed to simplify launching new markets with tailored risk models. This could accommodate institutional participants while maintaining overall protocol stability.
Currently, AAVE generates most revenue from lending activities. The new framework seeks to diversify these income streams by funneling revenue from other future products to the DAO as well.
The proposal includes creating a foundation to protect the Aave brand and intellectual property. Further community voting will be required to activate V4 and allocate the proposed funds.
The requested $25 million and 75,000 AAVE tokens would cover one year of development, audits, and marketing. This upgrade is positioned as a pivotal step in the protocol’s evolution toward becoming a full DAO-controlled financial infrastructure.
