Decentralized protocols allow token holders to vote on parameters, but it is very difficult to directly take a trademark certificate to court. The proposal submitted by Aave Labs to the Governance Forum on October 2nd aims to fill this gap: to establish a Cayman Islands foundation company without members or shareholders, which will in the future hold the intellectual property rights of the Aave trademark, main domain names, and related code as a legal entity. The key term here is “proposal.” Currently, this is just a consultation for community feedback from the ARFC community, and the Snapshot voting process as well as the on-chain AIP voting have not yet been completed; it is too early to claim that the foundation has been established or that the assets have been transferred.

Why does an on-chain protocol need off-chain entities? Over the years, Aave has invested in purchasing code development, risk tools, models, and documentation, but the ownership of these achievements may remain with different service providers; Aave trademarks and major domain names are not all under the direct control of DAO. DAO can vote on funding allocations, but it cannot register trademarks, sign contracts, or file infringement lawsuits on its own like a company can. If a protocol wants to protect its brand and assert rights to its code, someone must represent these assets within the real legal system. The problem is that if this person gains too much power, they could potentially override the governance structure.

Act only as the custodian of assets, not as a member of the protocol's board of directors.

This first-phase proposal deliberately narrows the responsibilities of the foundation. The foundation is intended to be responsible for holding, protecting, and licensing intellectual property rights under the agreement, with one independent director and one supervisor who is not affiliated with it. The proposal specifies that Aave Labs and DAO service providers are neither allowed to appoint these individuals nor to occupy the corresponding positions. The foundation plans to license the Aave brand for product development without charging a licensing fee; matters such as the token issuance, risk parameters, selection of service providers, budget, and modification of the framework will still be decided by the token holders through the existing governance processes. Only if these restrictions are ultimately incorporated into formal legal documents and enforcement mechanisms will the foundation have the potential to function as a 'safe deposit box,' rather than another decision-making center.

The establishment of legal entities and the transfer of assets are also handled separately. In the first phase, only the establishment of entities, the hiring of independent personnel, and the assumption of reasonable legal fees are required; there is no annual permanent budget. The specific transfer of intellectual property rights such as trademarks, domain names, and codes will be discussed again in subsequent phases on the governance forum. This phased design reduces the risk of one vote concentrating all ownership powers, which also means that it cannot be claimed at this time that “DAO has regained all intellectual property rights.” The proposal author acknowledges that the ownership of the existing service agreements is dispersed, and modifying or transferring each asset involves legal work and costs.

The foundation plans to submit a quarterly report, disclosing information on held assets, changes in ownership, expenditures, and rights protection actions. DAO also has the authority to appoint and remove directors through AIP, retains the right to approve amendments to the charter, the disposition of core intellectual property, and reorganizations, and may instruct on the liquidation and transfer of assets to the successor entity. These may seem like details, but they actually determine whether "community protection" can be effectively implemented in written documents. After token voting issues instructions, whether directors are bound by local company law obligations, and when they must refuse or postpone execution, are all practical issues that need to be clearly explained within the governance design.

From forum discussions to actual transfers, there are still several hurdles to overcome.

The proposed process is as follows: after the community reaches a consensus, it moves on to Snapshot. Then, AIP approves the establishment and related expenses. Only thereafter will an entity be registered in the Cayman Islands, and directors and supervisors be appointed. Once the entity qualifies to hold rights, the transfer of trademarks, domain names, and codes will be initiated. If any step is not successfully completed, the timeline must be rewritten. Some participants in the forum have suggested that other jurisdictions such as Swiss foundations also deserve consideration, with particular attention paid to long-term intellectual property holding and potential legal obligations that may arise from future commercial licensing. Such opinions indicate that there are indeed disputes regarding the legal framework itself.

For ordinary Aave users, wallet operations, lending interest rates, and collateral rules will not change in the short term due to a single ARFC. What needs attention are the longer-term institutional risks: who will ultimately hold the key brands and code generated by the protocol, who will have the authority to permit, protect, or dispose of them, and who will have the final say in case of disputes. In the past, on-chain governance often emphasized "community decisions," but in reality, it relied on a few operators for trademarks, domain names, and actual contracts. This proposal by Aave aims to align bookkeeping governance with legal ownership, but such alignment requires formal authorization, rigorous documentation, and continuous reporting; it will not happen automatically just because the entity is called a "foundation."

This is not a solution that can be simply rated as “centralized” or “decentralized.” Without a legal entity, DAO may pay for the results of their own efforts but find it difficult to protect their rights; with a legal entity, however, there is a need to prevent them from exercising discretion beyond the scope of their responsibilities. What is most worth testing in the first phase is not how many grand principles are announced, but whether the powers of appointment and removal of independent directors, constitutional restrictions, budget boundaries, and quarterly disclosures can be effectively implemented in subsequent documents. At present, it is still in the discussion and feedback collection stage. It will be at the next round when Snapshot and AIP will tell the market whether the Aave community is willing to establish a legally binding framework for its intangible assets.

Source: Aave Governance Forum, Aave Labs published on October 2, 2026, as ARFC. https :// governance.aave.com /t/ arfc-the-aave-foundation-phase-1 /25756