Aave DAO Debates Fee Diversion Concerns After CoW Swap Integration

Aave's new CoW Swap integration is sparking heated debate—and it's all about where the money flows.

Fee Friction Emerges

The decentralized lending giant recently plugged into CoW Swap, a popular DEX aggregator known for its 'Coincidence of Wants' matching engine. The move promised users better swap rates and MEV protection. But the fine print revealed a potential reroute: transaction fees that once flowed directly back to Aave's treasury might now take a detour.

DAO Deliberates the Trade-Off

Proponents argue the integration boosts utility and attracts new users, which should increase protocol revenue overall—a classic 'grow the pie' strategy. Critics, however, see a slippery slope. They warn that ceding direct fee control sets a dangerous precedent, potentially eroding a key revenue stream that funds development, grants, and security audits. It's a governance tug-of-war between immediate user benefits and long-term treasury health.

The question isn't just technical; it's philosophical. Is maximizing user value today worth potentially undermining the protocol's financial sovereignty tomorrow? Some DAO members are pushing for a clear, binding fee structure before full deployment. Others call it unnecessary bureaucracy—just another case of decentralized governance slowing down progress to debate what traditional finance would quietly siphon off anyway.

The outcome will signal how DeFi's blue chips balance growth with self-sustainability. One thing's certain: in the world of decentralized finance, every swap has a story, and every fee has a future.

Delegate concerns over fees and alignment

EzR3aL highlighted that Aave’s previous swap integration with ParaSwap generated referral revenue for the DAO without charging users directly. Under the new CoW Swap setup, documentation suggests fees of 15–25 basis points, with on-chain data indicating that partner fees are routed to a CoW Swap-linked address rather than the DAO treasury.

The delegate warned of potential long-term revenue loss and questioned alignment, noting Aave’s brand and interface were built with DAO support. The concerns were amplified on X after user fredcat publicly asked whether “millions in swap fees” had been quietly redirected away from tokenholders.

Did Aave Labs quietly redirect millions in swap fees away from the DAO treasury?https://t.co/lwXbsbkZPx$Aave delegate @DeFi_EzR3aL just posted some on-chain research. The following thread breaks down his post
🧵@Marczeller @StaniKulechov @DeFi_EzR3aL

Aave Labs responds, citing interface independence

Aave Labs said the interface is a self-funded product separate from the DAO-governed protocol, giving Labs discretion to monetize non-protocol features like swaps.

“Aave Labs funds, builds, and maintains its own interface. The licensing reflects this separation clearly. The interface is a product, not a protocol component, and Aave Labs has the discretion to operate and monetize it in a way that supports its continued development,” the team responded.

The team argued that integrating CoW Swap improves execution quality and MEV protection for users, especially during volatile markets, and stressed that the change does not affect Core protocol economics such as borrowing or lending rates.

Founder clarifies rationale behind CoW Swap

Aave founder Stani Kulechov reinforced this position, noting that Aave Labs historically built and funded swap adapters independently, including the earlier ParaSwap integration. He said surplus execution value was voluntarily donated to the DAO in the past, but monetization of interface features remains within Labs’ remit.

Some clarifications here:

– Aave Labs on its own and self funded application integrated years ago ParaSwap adapters

-This adapters were used to do non-protocol related features such swaps

-We mostly build these and funded them

-We never to a fee on these adapters

-Given the…

Kulechov said CoW Swap improves user experience and security, while stressing Aave remains permissionless and open to alternative interfaces. “Our goal is always to use Aave Protocol and build also features that are outside of the Aave Protocol that help to keep the users in the protocol, transact more and have competitive advantage,” he added. 

Also read: Aave Integrates with Mantle in New Bybit-Backed Expansion