Key Highlights
- Aave founder Stani Kulechov backed a proposal to establish the Aave Foundation as a legal entity for protocol intellectual property.
- The proposed Cayman Islands foundation would hold legal title to Aave’s trademark, domains, and codebase IP.
- The foundation would not control protocol decisions, with AAVE token holders retaining existing governance powers.
Aave CEO and founder Stani Kulechov has backed a proposal to establish the Aave Foundation as a legal entity to hold intellectual property associated with the Aave Protocol.
In an X post on October 2, Kulechov shared the governance proposal and said it would allow Aave to transfer its intellectual property to the Aave DAO in line with the previously proposed Aave Will Win framework.
Kulechov said the structure would “strengthen Aave by unifying everything under one asset,” referring to the AAVE token. In a follow-up reply, Kulechov said the structure would benefit token holders by “removing the duality between token and equity.”
Aave proposes Cayman Islands Foundation
The proposal, titled “[ARFC] The Aave Foundation, Phase 1,” seeks to establish the Aave Foundation as a memberless foundation company in the Cayman Islands.
The first phase would cover incorporation and the appointment of an independent director and supervisor. The entity would be structured to hold legal title to Aave-related intellectual property for the benefit of the protocol.
The current phase focuses on establishing the legal entity and appointing its initial oversight roles. Later steps involving the transfer of the trademark, domains, and codebase IP would return to Aave governance as separate proposals.
Proposal comes amid Aave’s EU regulatory push
The Foundation proposal comes shortly after Kulechov questioned European regulatory positions concerning stablecoin returns and access to decentralized finance.
Earlier on October 2, Kulechov questioned positions from the European Central Bank and European Banking Authority as the European Commission reviews the Markets in Crypto-Assets Regulation, or MiCA. He argued that the approach could make access to open DeFi more restrictive.
The comments followed Aave Labs’ September 30 submission to the European Commission’s MiCA review. In that submission, Aave argued that EU rules should distinguish decentralized protocols from financial intermediaries and called for clarification around lending returns, self-custody and access to DeFi.
The EBA has separately recommended that the European Commission consider regulating crypto-asset lending, including lending activity connected to decentralized finance. The authority said lending and borrowing are taking place through both centralized and decentralized arrangements and noted that regulated crypto-asset service providers are increasingly facilitating access to DeFi.
The two developments concern different areas. The EU debate focuses on how DeFi and related services could be treated under regulation, while the Foundation proposal concerns the legal ownership and protection of Aave-related intellectual property.
Why Aave wants a separate legal entity
According to the proposal, Aave governance has funded service providers that have produced code, risk tools, models, and documentation over several years. Ownership of those outputs has been handled inconsistently across different engagements.
The proposal also says the Aave trademark and primary domains currently sit outside DAO control.
Aave Labs argues that a DAO cannot itself register a trademark, bring an infringement action, or hold legal title to a domain. A foundation company would provide a legal entity capable of owning those assets, entering contracts, and appearing in court.
The proposed foundation would have objects limited to holding, protecting, and licensing intellectual property for the benefit of the Aave Protocol.
Foundation would not control protocol decisions
Aave token holders would continue making decisions on listings, protocol parameters, budgets, service-provider engagements, and framework amendments through the existing governance process. The foundation would hold legal title to designated assets but would not have a vote, veto, or advisory role over protocol decisions.
The proposal states that neither Aave Labs nor DAO service providers or their affiliates would have the right to appoint a director or supervisor.
An independent director would manage the foundation, while an independent supervisor would oversee it. After the initial appointments, directors would be appointed and removed through Aave Improvement Proposals.
What IP would move to the foundation
Once established, the foundation would take legal title to the Aave trademark, primary domains, and protocol codebase IP. It would also hold intellectual property assigned through DAO service-provider agreements.
The foundation would license the Aave name back for product work without charging a licensing fee, allowing Aave-branded products to continue using the trademark.
The DAO would continue selecting service providers, setting their scope and approving compensation. Under the proposed structure, new service-provider agreements would include the assignment of resulting code, tooling, models, and documentation to the foundation.
Funding limited to formation costs
The first phase would only seek funding for the reasonable costs associated with setting up the foundation. This includes incorporation, legal work, qualified secretary services, and the appointment of the director and supervisor.
No recurring operating budget is requested. Any future funding requirements would need to be submitted through a separate governance proposal.
The foundation would also publish quarterly reports covering its assets, changes in ownership, operating expenses, and legal actions taken to defend the trademark or codebase.
Future changes would require DAO approval
The proposal is divided into separate phases so the community can vote on each stage individually. If the current ARFC receives community support, it would move to a Snapshot vote, followed by an AIP authorizing the incorporation and related costs.
After incorporation, the transfer of the trademark, domains, and codebase IP would begin. Each subsequent phase would return to governance with its own scope and vote. The current proposal therefore does not authorize all future changes to the foundation.
DAO retains powers over the foundation
Aave governance would retain several powers over the proposed legal entity.
Through an AIP, the DAO could appoint or remove directors, approve amendments to the foundation’s constitution, consent to the disposal of core intellectual property, and approve a merger or restructuring.
The DAO could also direct the foundation’s winding-up and determine how its remaining assets are transferred, subject to directors’ fiduciary and statutory duties and applicable law.
Aave Labs would have no foundation seat
Although Aave Labs authored the proposal, the document states that the company would have no governance or economic role in the foundation. Aave Labs would not receive a board seat, supervisor role, or appointment rights and would not receive any portion of the proposed setup funding.
The foundation would be memberless, meaning no shareholder or member would hold ownership rights over the entity.
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