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Aave hands over governance and admin keys to the DeFi community

Photo of: Janeth Diamond
by Janeth Diamond

Aave has announced the last leg of the hand-off of admin control of its protocol to the community of Aave token holders. Ever since July Aave has been perpetually testing its decentralized governance model so that the roll-out becomes a streamlined process. 

The handing over of the administrative controls to the governance community is perhaps on the biggest examples set by a Decentralized Finance protocol. A decentralized protocol in spirit only means that no centralized authority is supposed to have any control over the project. 

Source: Twitter

Aave’s founder Stani Kulechov and other developers of the protocol will remain an active part of Aave in order to build new functions based on the needs of the community. In a series of protocols that are renouncing their control of protocol governance, transferring power from the founders to the community is what decentralization is all about. With the official handover of admin keys to governance contracts, it will go a long way in allowing decentralized governance votes to have a direct hand and control over the changes made to the protocol.

After months of testing and tweaking, the handover procedure was announced. The testing was a major step so as to ensure that the governance decisions could easily and coherently change and convert to changes on-chain. During this process, developers took on the role of an intermediary between the community and on-chain action. Aave’s governance tokens were initially distributed in a November 2017 token sale which raised nearly $18 million for protocol development. 

Aave’s move is an extension of the rule which says that rather than being ruled by a centralized team of developers, DeFi applications that pursue decentralized governance allow protocol users to vote on future changes and decide which direction the protocol should proceed towards. Stani Kulechov said:

“Giving up the admin keys to the Aave token holder governance is a historically remarkable event. Aave is more decentralized than ever.” 

He further added:

“The key handover should also incentivize more developers to contribute to the Aave protocol codebase, creating grant mechanisms, and driving the protocol towards self-sustainability. The Aave founding team will be one of the core developers of the protocol in the future and will build what the community wants.”

Back in July, Aave released its plans for decentralized governance which talked about how contributors will be rewarded. It also aimed at providing added security against losses especially when the value of the crypto-backed loans could go for a toss. During that time, the protocol already possessed $400 million in user deposits as per the reports of the DeFi Aggregator DeFi Pulse. Ever since the value of the tokens placed in the lending protocol has risen to $1.7 billion as of August 30th. 

Source: DeFi Pulse

With the move, Aave now follows the footsteps of Compound protocol and Uniswap which initiated the community control in early 2020. The move is an orientation towards facilitating further innovation and user security with comprehensive testing measures before releasing the governance completely.