Aave DAO Debates Where Frontend Fees Belong After CoWSwap Shift

A debate inside Aave’s DAO is raising questions about who controls the protocol’s interface and who benefits financially from it.

The issue surfaced after Aave Labs integrated decentralized exchange aggregator CoWSwap into the app.aave.com interface earlier this month, replacing earlier Paraswap routing used for collateral swaps.

While the change was framed as a user-experience upgrade offering improved execution and MEV protection, delegates later flagged that swap-related fees were no longer flowing to the Aave DAO treasury.

An open letter from Orbit delegate EzR3aL argued that the integration introduced frontend fees of roughly 15 to 25 basis points that accrue to an external recipient rather than the DAO.

On-chain data cited in the post showed weekly distributions of ether tied to CoWSwap’s partner-fee mechanism across multiple networks, potentially amounting to millions of dollars annually.

That surplus has since declined as routing shifted to CoWSwap’s batch-auction model, which prioritizes execution certainty over price improvement.

But at the center of the debate is a distinction Aave Labs says has always existed: the protocol versus the product.

In a forum reply, Aave Labs said the interface is operated, funded and maintained independently from the protocol governed by the DAO. Under this model, the DAO controls on-chain parameters, interest rates and protocol-level fees, while Labs retains discretion over optional, application-level features such as swap routing and interface monetization.

“Any monetization applies only to accessory features,” Aave Labs wrote, arguing that this separation preserves protocol neutrality and avoids centralizing economic control at the base layer.

Critics, however, say the practical reality has been different. Marc Zeller of the Aave Chan Initiative (ACI) said there had been a long-standing expectation that monetization tied to the aave.com frontend — including swap surplus and flash-loan-assisted execution — would benefit the DAO, especially given that the brand, governance legitimacy and much of the underlying development were funded by tokenholders.

The controversy deepened with claims that CoWSwap solvers increasingly rely on free flash loans from external protocols such as Balancer or Morpho, bypassing Aave’s own flash-loan infrastructure and further reducing DAO revenue. Zeller opined that that the change effectively redirected user flow, and fees, away from the protocol.

Aave Labs pushed back, saying the Paraswap surplus was never a protocol-enforced entitlement and disappeared naturally once routing logic changed. It also emphasized that alternative frontends remain permissionless and that the DAO is free to build or fund its own interface if desired.

As such, Aave Labs said it would more clearly distinguish between protocol-governed economics and independently funded product decisions going forward.

The debate arrives as Aave prepares for its V4 upgrade, which introduces new liquidation and risk-management mechanisms.