[ARFC] Service Provider Compensation Reform for V4 Alignment

[ARFC] Service Provider Compensation Reform for V4 Alignment

Author: ACI

Date: 2025-10-10

Summary

This ARFC proposes a comprehensive reset of all active Aave service provider compensation streams to better align contributors with the success of the Aave ecosystem ahead of the Aave V4 launch.

The proposal maintains the same total annual compensation levels for each provider while introducing a one-year vesting component tied to clear key performance indicators (KPIs).

Motivation

As stated in the State of the Union post, Aave DAO should seek to ensure that the service providers who contributed significantly to Aave’s success are directly aligned with the protocol’s growth and long-term sustainability.

The goal of this reform is to reset and unify the compensation framework for all key service providers, ensuring alignment with Aave V4 delivery milestones and improving transparency around deliverables.

Key motivations:

1. Alignment with AAVE performance – linking compensation to measurable outcomes.
2. Preparation for V4 – establishing a synchronized, goal-driven working structure across contributors.
3. Simplicity and fairness – resetting all streams equally for a one-year term.
4. Long-term alignment – variable revenue sharing proposed in the State of the Union will be postponed to V4 rollout and finalized thereafter.

Note: While aligned and considered a key service provider of the Aave DAO, BGD Labs has preferred to opted out of the compensation reform and crafted its own proposals. The ACI respects their decision and will support their standalone proposal.

Specification

The following structure will apply to all primary Aave service providers:

| Provider | Annual Stream (Reset) | KPI Vesting (1 year) | Immediate Grant | | --- | --- | --- | --- | | ACI | Same as previous stream | $750K AAVE vested 12mo, KPI-based | $250K AAVE (90d TWAP) | | TokenLogic | Updated to 2.5M GHO | $750K AAVE vested 12mo, KPI-based | $250K AAVE (90d TWAP) | | LlamaRisk | Same as previous stream | $750K AAVE vested 12mo, KPI-based | $250K AAVE (90d TWAP) | | Chaos Labs | Same as previous stream | $750K AAVE vested 12mo, KPI-based | $250K AAVE (90d TWAP) |

Overall compensation reform parameters

• All current service provider payment streams are stopped and replaced with new streams, effective immediately upon AIP execution.
• Each provider receives $250K worth of AAVE (90-day TWAP) distributed at proposal execution.
• Each provider receives $750K worth of AAVE vested linearly over 12 months, subject to KPI success.
• KPI performance threshold: 85% success rate of defined deliverables completed within official deadlines.

KPI Definitions

ACI

• Skywards TEMP CHECK business case + ARFC publication + Snapshots + Draft AIP payload delivered for review within deadlines.

TokenLogic

• Monthly buyback management execution completed, and Finance AIP payload submitted on time each month.

LlamaRisk

• ARFC risk reviews delivered within the defined review period and aligned with publication deadlines.

Chaos Labs

• ARFC risk reviews delivered within the defined review period and aligned with publication deadlines.

Incentives

The KPI-linked vesting ensures that each provider remains motivated and outcome-oriented throughout the V4 development cycle.

This structure simplifies future variable alignment mechanisms expected for V4 (e.g. revenue-based components) while immediately aligning contributors through AAVE token exposure.

AAVE Streams

The AFC will set up the AAVE streams via Llamapay vesting service, leveraging their AAVE reserves sourced from buybacks. Every month, KPI compliance will be monitored. If a service provider stays below the 85% threshold for two consecutive months, their stream will be terminated by the AFC, and undistributed AAVE will return to the AAVE DAO.

Disclosure

This proposal is based on the Aave State of the Union initiative and is not sponsored or compensated by any service provider. ACI authored this proposal in coordination with the involved contributors for DAO consideration.

Next Steps

1. Collect community and Risk Service Provider feedback on the ARFC.
2. If the Snapshot outcome is YAE, escalate to an AIP for implementation.
3. Begin vesting streams and apply KPI monitoring through the governance framework.

Copyright

Copyright and related rights waived via CC0