Aave Labs Abandons Horizon Token Amid Backlash from DAO Members
Centralized firms operate efficiently by reducing transaction costs, a concept highlighted by economist Ronald Coase. DAOs exhibit both centralized and decentralized characteristics. While they have leaders with significant influence, they still require community consensus for proposals.
Aave Labs recently announced "Horizon," a permissioned version of Aave v3 for institutions to access stablecoin liquidity. Despite plans to share revenue with the DAO, the proposal faced strong backlash from the community, leading to its abandonment in favor of moving forward with the product without a new token.
Key points include:
- Aave's Horizon proposal generated negative feedback regarding potential token dilution.
- Aave Labs accepted the DAO's consensus, dropping the token launch idea.
- Uniswap's similar situation with Unichain revealed community frustration over decision-making transparency.
- Unichain's poor market performance has prompted discussions on funding strategies from the DAO treasury.
- Both Aave and Uniswap illustrate the challenges DAOs face in balancing agile startup behaviors with decentralized governance norms.
The lengthy proposal process within DAOs can increase transaction costs, raising questions about the effectiveness and value of DAO governance compared to centralized models.