Aave Labs has published an ARFC on the Aave governance forum proposing the creation of an Aave Foundation, a Cayman Islands foundation company without members that would hold Aave Protocol’s trademarks and related intellectual property. In Aave governance, an ARFC is the detailed proposal stage, where the final structure is refined before a binding Snapshot vote and only then moved into onchain governance.
Why Aave wants a foundation
The proposal says Aave governance has funded a range of service providers over the years to build code, risk tools, models, and documentation. Ownership treatment for those outputs has not been consistent across engagements. In some cases, the assets are owned by the service providers that developed them.
It also says Aave’s trademarks and main domains currently sit outside the DAO’s control. A DAO cannot register trademarks, bring infringement claims, or hold legal title to domain names. The result, according to the proposal, is that the DAO has paid for assets it cannot directly protect.
A Cayman foundation company is presented as a way to solve that problem because it can own assets, sign contracts, and take part in litigation, while also operating without members, meaning no member has rights over the entity.
The proposal notes that foundations in DeFi have often faced scrutiny because they can accumulate broad discretion over time. It says that usually happens when a foundation relies on annual treasury allocations for funding and is run by the same team that originally proposed it. The design outlined here is intended to remove both conditions.
It also says that incorporation, cross-jurisdiction trademark transfers, and adding IP assignment terms to existing agreements each require separate legal work and costs. A phased process would let the community review each funding request on a defined scope before moving to the next step. The DAO would be able to stop the process at any stage, while the foundation would remain a functioning entity with a defined governance structure.
What the proposed Aave Foundation would do
Legal structure
The Aave Foundation would be incorporated in the Cayman Islands under the Foundation Companies Act as a foundation company without members. Under its memorandum of association, its purpose would be limited to holding, protecting, and licensing intellectual property for Aave Protocol.
The foundation would be managed by one independent director and overseen by one independent supervisor who has no affiliation with that director. After the initial appointments, directors could only be appointed and removed through an AIP.
The proposal says Aave Labs, any service provider hired by the DAO, and their affiliates would have no right to appoint the director or supervisor and could not serve in either role.
Assets the foundation would hold
The foundation would take legal title to the following assets:
- Aave trademarks;
- protocol repository intellectual property assigned to the foundation;
- main domain names;
- intellectual property assigned to the foundation through service-provider agreements.
As owner of those assets, the foundation would be responsible for filing, maintenance, protection, enforcement, and related legal action. Brand licensing would follow a one-way structure: the foundation would license the Aave name to product developers so Aave-branded products can continue to launch, and it would charge no licensing fee.
The DAO would still choose service providers, define their scope of work, and approve compensation through the current governance process. Code, tools, models, and documentation produced through those engagements would be assigned to the foundation and made a standard term in the relevant agreements. The proposal says this would give the DAO’s accumulated technical output a long-term owner without giving the foundation any authority over what gets built or who builds it.
Reporting and other responsibilities
The foundation would publish quarterly reports on the governance forum covering the assets it holds and any ownership changes, operating expenses, and any legal action taken to protect trademarks or the code repository. The first report would be published within 90 days after the end of the first full calendar quarter following the start of operations.
The DAO would cover reasonable costs tied to incorporation, the engagement of a qualified company secretary, legal fees, and the paperwork required for trademark and IP transfers. The proposal says no recurring budget is being requested in this proposal. Any future funding need would have to be submitted through a separate governance proposal.
Listings, parameter changes, budgets, service-provider hiring, and framework amendments would remain under the DAO’s existing governance process. The DAO would be able to appoint and remove directors through an AIP. It would also hold consent rights over any amendment to the foundation’s constitutional documents, any disposal of core intellectual property, and any merger or reorganization of the foundation. The DAO could also instruct the foundation through an AIP to wind up and transfer residual assets to a successor entity.
What happens next
If the community reaches consensus on the ARFC, the proposal would move to a Snapshot vote and then to an AIP authorizing payment of reasonable incorporation expenses, legal fees, and director appointment costs. The foundation would then be incorporated in the Cayman Islands, an independent director and supervisor would be appointed, and once the entity is able to hold assets, Aave’s trademarks, main domains, and repository IP would begin to transfer.
For future service-provider relationships, IP assignment terms would be added as a standard condition when agreements are renewed or when service providers are replaced through the normal governance process.
The proposal says the foundation would operate strictly within that stated purpose, while the governance system would continue to control all protocol decisions exactly as it does today. Listings, parameters, budgets, service-provider selection, and framework amendments would continue to be decided by tokenholders through governance. The foundation would have no vote, veto, or consultation right on those matters.
The foundation would have no members or shareholders, and no individual would own it. Its director would be independent, and its supervisor would be an independent service provider with no affiliation to that director. Aave Labs and any DAO service provider would have no seat in the foundation and no appointment rights.
Each stage of the foundation’s development would return to the governance forum as a separate proposal and be voted on separately. The community could reject any stage.
Can the DAO still control the protocol?
Would Aave Labs gain control of the protocol?
The proposal’s answer is no. Aave Protocol would remain governed by the DAO through tokenholders.
It also says Aave Labs would not hold a board seat, would not serve as supervisor, and would not have any appointment rights. Because the foundation would have no members, there would be no shareholder above the Aave ecosystem. The same restriction would apply to all service providers hired by the DAO.
Would Aave governance change?
According to the proposal, it would not. Listings, parameters, budgets, service-provider hiring, and framework amendments would continue to be decided by the DAO through the current process. The foundation would only hold title to the relevant assets and would have no discretion over protocol decisions.
Why the Cayman Islands?
The proposal says the Cayman Foundation Companies Act allows a foundation company to exist without members or shareholders while still holding legal title to assets, signing contracts, and participating in litigation. That structure would let the foundation hold and protect Aave trademarks without creating an owner above the DAO.
What if the DAO wants to dissolve the foundation?
The proposal says the DAO could replace directors at any time through an AIP or instruct the foundation to wind up and determine how residual assets are handled, including transfer to a successor entity. It adds that any such step would still be subject to directors’ fiduciary and statutory duties and to applicable law.
Which IP would transfer and when?
Aave trademarks, main domain names, and protocol repository intellectual property would transfer after the foundation entity is established. Intellectual property created in future service-provider engagements would be assigned to the foundation as a standard contractual term under the relevant agreements.