This article comes from: Aave Community Governance Forum
Compiled | Odaily Planet Daily (@OdailyChina); Translator | Moni
Recently, Aave Labs released "ARFC" (Note: Aave Final Request for Comments) in the Aave Community Governance Forum, aiming to establish the Aave Foundation, a non-member foundation company established in the Cayman Islands to hold ownership of the Aave trademark and related intellectual property rights on behalf of Aave Protocol. ARFC is a detailed proposal stage in the Aave Governance Forum, where the proposal will complete the final plan refinement and undergo a binding snapshot vote before entering the on-chain governance process.
Why does Aave set up a foundation?
For years, Aave Governance has provided funding to a variety of service providers to develop code, risk tools, models, and documentation. But ownership of these outputs is handled inconsistently across collaborations, and in some cases the assets in question are even owned by the service providers who actually develop them. Today, the Aave trademark and primary domain name are also outside the control of the DAO. The DAO cannot register trademarks, file infringement lawsuits, or hold ownership of domain names, so the net result is that the DAO is paying for assets it cannot protect.
A Cayman Foundation Company solves the above problems because it can hold title to assets, enter into contracts and participate in litigation, while being structured as a memberless entity so that no members have rights over the entity.
In the DeFi space, foundations have always been subject to a degree of scrutiny, often due to the large amount of discretion they have accumulated over time, a situation that often stems from the fact that foundations rely on annual treasury allocations for funding and are run by the same team that originally proposed the establishment of the foundation. The design proposed below will eliminate these two conditions.
In addition, entity establishment, transfer of registered trademarks across jurisdictions, and incorporation of intellectual property transfer provisions into existing agreements require separate legal work and corresponding costs. A phased approach ensures that each funding application has a clear scope, allowing communities to evaluate it on a case-by-case basis and review it before moving on to the next phase. The DAO can cease advancement at any stage, while the Foundation will still exist as a functioning entity with a clear governance structure.
What exactly does the Aave Foundation do?
Aave Foundation Legal Structure
The Aave Foundation will be registered in the Cayman Islands in accordance with the Foundation Companies Act and will adopt the form of a non-member foundation company. According to its memorandum of association, the foundation’s purpose is limited to holding, protecting and licensing intellectual property for Aave Protocol.
The Foundation will be managed by an independent director and supervised by an independent supervisor who is not affiliated with the director. After initial appointment, directors can only be appointed and removed through the AIP.
Neither Aave Labs nor any service provider engaged by the DAO, nor their affiliates, shall have any right to appoint a director or supervisor, nor may they hold either office.
What assets does the Aave Foundation hold?
The Aave Foundation will obtain legal ownership of the following assets:
Aave trademark;
Intellectual property rights of the protocol code base transferred to the Foundation;
Primary domain name;
Intellectual Property Transferred to the Foundation under a Service Provider Agreement.
As the owner of these assets, the foundation is responsible for the application, maintenance, protection, rights protection and execution of related assets. Brand licensing adopts a one-way authorization method. The Foundation licenses the Aave name to product developers so that Aave-branded products can continue to be launched without charging any licensing fees.
The DAO will still select service providers, determine the scope of their work and approve their compensation through existing governance mechanisms. The code, tools, models and documentation generated by these services will be transferred to the Foundation and become a standard condition of the relevant cooperation agreement. In this way, the technical achievements accumulated by the DAO will have a long-term stable owner, and the foundation will not have any decision-making power on what content is developed or who develops it.
Other responsibilities of Aave Foundation
The Aave Foundation will publish quarterly reports to the Governance Forum on its holdings and any changes in ownership, operating expenses, and any legal actions taken to protect trademarks or code bases. The first report will be published within 90 days of the end of the first full calendar quarter after the Foundation begins operations.
The DAO will bear the reasonable costs of entity registration, hiring of a qualified company secretary, legal fees, and procedures related to the transfer of trademarks and intellectual property rights (this proposal does not apply for any recurring budget, and future funding needs must be applied for through a separate governance proposal). All listings, parameter adjustments, budgets, service provider hiring, and framework revisions will still be made by the DAO through existing governance mechanisms.
The DAO can appoint and remove directors through the AIP; the DAO has the right to consent to any modifications to the foundation's charter, the disposal of core intellectual property rights, and the merger or reorganization of the foundation; the DAO can also instruct the foundation to liquidate and transfer the remaining assets to the successor entity through the AIP.
Aave Foundation follow-up work
If the community reaches consensus on the ARFC, the proposal will go to Snapshot voting and then submit an AIP to authorize the payment of reasonable entity registration fees, legal fees, and director appointment fees. After that, the foundation will be registered in the Cayman Islands and independent directors and supervisors will be appointed. After the entity is established and has the ability to hold assets, the transfer of Aave trademarks, primary domain names, and code base intellectual property rights will begin.
For future service provider cooperation, when the relevant cooperation agreement is renewed or the service provider is changed through the normal governance process, the intellectual property transfer clause will be included as a standard condition in the new service provider agreement.
The Aave Foundation will continue to work strictly in accordance with the above purposes, and the governance system will continue to have control over all decisions of the protocol, completely consistent with the current situation. Listing, parameters, budget, service provider selection, and framework revisions will continue to be determined by token holders through the governance mechanism, and the Foundation will have no voting, veto, or advisory rights on these matters.
The Aave Foundation has no members or shareholders, and no individual has any ownership rights in it. The directors of the foundation are independent directors, and the supervisors are independent service providers who are not affiliated with the directors; neither Aave Labs nor any DAO service provider has a seat in the foundation or the right to appoint.
Each stage of the development of the Aave Foundation will be resubmitted to the governance forum as a separate proposal and subject to a separate vote, and the community can refuse to advance any of the stages.
Can DAO still control the protocol? FAQ
Will Aave Labs gain control of the protocol?
Won't. The Aave protocol is still governed by the DAO through token holders.
In addition, Aave Labs does not hold a seat on the foundation's board of directors, serve as an overseer, or have any appointment rights. The foundation adopts a memberless structure, so there are no shareholders sitting on top of the Aave ecosystem; the same restrictions apply to all service providers hired by the DAO.
What changes will happen to Aave’s governance mechanism?
Nothing will change.
Listing, parameters, budgets, service provider hiring, and framework revisions will continue to be determined by the DAO through existing processes. The foundation is only responsible for holding the ownership of relevant assets and does not have the discretion to make decisions on the agreement.
Why choose the Cayman Islands?
Under Cayman’s Foundation Companies Law, a foundation company can exist without members or shareholders while still being able to hold legal title to assets, enter into contracts and participate in litigation.
This enables the Foundation to hold and protect the Aave trademark without creating an owner that overrides the DAO.
What happens if the DAO wants to dissolve the foundation?
The DAO may, through the AIP, replace directors at any time, or direct the Foundation to liquidate and decide on the disposition of remaining assets, including transferring them to a successor entity.
However, in the above circumstances, directors must still comply with their fiduciary and statutory obligations, as well as the relevant provisions of applicable laws.
What intellectual property rights will be transferred? When will it be transferred?
The Aave trademark, main domain name, and protocol code base intellectual property rights will be transferred after the foundation entity is established.
The intellectual property rights generated by future service provider cooperation will be transferred to the foundation as standard conditions according to relevant agreements.