Aave's new plan Horizon sparks community controversy, founder responds

Aave Labs recently launched a new initiative called Horizon, aimed at promoting institutional adoption of decentralized finance through real-world asset (RWA) products. The initiative allows institutions to use tokenized money market funds as collateral to borrow USDC and GHO at scale. Aave Labs hopes to further bridge the gap between traditional finance and DeFi.

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

According to the temperature assessment proposal, Aave Labs states that the demand for tokenized real-world assets is on the rise. Tokenized U.S. Treasuries have increased by 408% year-on-year, reaching $4 billion. The on-chain RWA scale is expected to reach $16 trillion over the next decade. The Horizon plan will operate as a licensed instance of the Aave protocol, expanding institutional access to DeFi.

The Horizon plan implements a structured profit-sharing mechanism. In the first year, 50% of the revenue will be allocated to Aave DAO, 30% in the second year, 15% in the third year, and 10% in the fourth year and beyond. If tokens are issued, 15% will be allocated to Aave DAO.

However, the community strongly opposes this. Aave DAO independent representative EzR3aL believes that the profit-sharing ratio is decreasing too quickly and that the use case for the new token is unclear. He questioned the necessity of the new token, as well as issues such as the GHO minting process and the DAO's control over Horizon.

Other community members are also critical of the new token issuance. Some believe that this will dilute the value of Aave tokens and that a 1:1 ratio should be maintained. Others point out that launching a new token for a new business line is inappropriate behavior and may face market punishment.

In response to the controversy, Aave founder Stani Kulechov stated that the consensus of the Aave DAO will be respected. He mentioned that the DAO has reached a consensus, and even if the new token could accelerate revenue growth, it would not arouse widespread interest. The team will revise the proposal to consider feedback and will not push matters deemed inappropriate by the DAO.

Some analyses suggest that the Horizon proposal can be broken down into finer sub-proposals. The community's main demand is for no new tokens and to increase the share of protocol revenue to the DAO. Targeting institutions with DeFi protocols is a major trend, and Horizon is expected to increase DAO revenue. The key is how the community and the team can reach a consensus on profit distribution.