The new Aave proposal sparks heated discussion in the community, involving the development of RWA products and profit distribution

Aave has always been highly sought after by the community, but recently it has sparked unprecedented waves of questioning.

Aave Labs recently launched a new initiative called Horizon, aimed at developing a product based on real-world assets (RWA) to facilitate institutional adoption of decentralized finance. This product will allow institutions to use tokenized money market funds (MMF) as collateral to borrow USDC and GHO at scale. Aave Labs hopes to further bridge the gap between traditional finance and DeFi with this product.

However, within a few days after the proposal was released, the community expressed strong opposition to the Horizon plan, particularly questioning the potential issuance of new tokens and the profit distribution mechanism of Horizon.

Overview of the Horizon Project and Controversial Issues

According to the temperature assessment proposal, Aave Labs pointed out that there is a growing demand for tokenized real-world assets (RWA) due to the ability of tokenization to enhance liquidity, reduce costs, and enable programmable trading around the clock. Tokenized U.S. Treasuries have increased by 408% year-on-year, reaching $4 billion, and it is expected that the on-chain RWA scale could reach $16 trillion in the next 10 years.

The Horizon plan proposes an RWA product that operates as a licensed instance of the Aave protocol. This product will allow institutions to use tokenized money market funds as collateral to borrow USDC and GHO at scale, thereby unlocking stablecoin liquidity and expanding institutional access to DeFi.

The Horizon plan also proposes a structured profit-sharing mechanism. Specifically, 50% of the profits will be distributed to the Aave DAO in the first year, 30% in the second year, 15% in the third year, and 10% in the fourth year and beyond.

In addition, if Horizon issues tokens, 15% will be allocated to Aave DAO, with 10% allocated to the Aave DAO treasury, 3% for Aave ecosystem incentives, and 2% distributed in the form of airdrops to Staked Aave holders.

Community Response: Profit Distribution Ratio and New Token Spark Controversy

However, the launch of the Horizon plan has sparked strong opposition from the community. Aave DAO's independent representative EzR3aL stated that the rate of decline in profit-sharing distribution is too aggressive. He believes that the first two years may be the market launch phase, and income will not be very high, while significant income may only appear in the third year and beyond. However, by that time, the profit-sharing ratio will have already dropped to 10%.

EzR3aL expressed confusion about the use of the new token, questioning whether it is for independent governance, to compensate investors, or as a means for Aave Labs/Avara to generate profit. He also raised questions about the GHO minting process and the Aave DAO's oversight of Horizon's operational functions.

Other community members have also criticized the issuance of the new token. Some believe there is no reason to issue a new token and that $AAVE itself should be used as the governance token. Others have pointed out that launching a new token for a new business line is a bad practice that could be punished by the market.

Aave Founder Responds: Respect for DAO Consensus

A few days after the event began to unfold, Aave's founder and CEO Stani Kulechov responded, stating that the overall consensus of Aave DAO is disinterest in other tokens, and this consensus will be respected. He acknowledged that the DAO has reached a consensus that even if tokens could accelerate Aave's revenue growth, they would not generate widespread interest.

Stani emphasized that RWA is an extremely important source of revenue for Aave DAO and should not be overlooked, so they will revise the proposal to take feedback into account. He stated that Aave DAO is a true DAO, and any preliminary discussions and consensus reached must be respected.

Analysis and Outlook

Cryptocurrency researchers pointed out that the Horizon proposal can be divided into finer sub-proposals. The demands of the DAO are actually quite simple: no new tokens, and the funds to attract liquidity can be provided by AAVE DAO; the proportion of protocol income given to AAVE DAO needs to be increased.

The trend of DeFi protocols leaning towards institutions is significant, and the launch of Horizon is expected to increase the revenue of AAVE DAO. In addition, Horizon will support $GHO as the primary stablecoin for borrowing, which will help expand the market size and revenue of AAVE's stablecoin business.

Overall, the launch of Horizon is a good thing, and the key lies in how the community and the team can reach consensus on profit distribution. Next, we will continue to pay attention to how Aave DAO and Aave Labs adjust their proposals, as well as the community's response to the revised proposals.