Aave – the popular decentralized money market protocol – has made a major announcement today regarding the ownership of the protocol’s admin keys. Previously, the Aave admin keys were controlled by a 3 of 5 multisig (members of the core team), but now the protocol is taking an important step towards further decentralization by passing ownership of the keys directly to Aave governance.
Today marks a historic moment for the Aave Protocol: we have officially handed over the protocol admin keys to the governance, an important step towards decentralisation!
Read more about the Admin Key Handover and what this means for the protocol: https://t.co/89CxKb09rq
— Aave (@AaveAave) October 28, 2020
Aave governance went live on the Ethereum mainnet shortly before the launch of the new AAVE token. At the time, LEND token holders participated in the very first Aave Improvement Proposal (AIP) and voted to begin the migration of the LEND token to AAVE. The migration is still in effect and the AAVE token is officially the new governance token of the protocol.
As we covered in a previous piece on Aave, the new token can vote on AIPs and also stake their governance tokens in the Safety Module to earn safety incentives in return for risking their AAVE tokens to secure the protocol. At the time of this announcement, 85.51% of the total LEND token supply has been migrated to the AAVE token.
How will it work?
At a high level, the Aave core team will be migrating ownership of the Aave Protocol to the governance of smart contracts. For example, the Aaave Governance contract will now act as the Lending Pool Manager and have the ability to adjust various protocol parameters
While Aave has always been non-custodial, the community and users now have full control over the protocol as well. Governance parameters can and will continue to be tweaked for maximum decentralization, but now the community must come together to push all new changes through. Since the core team no longer has control of the admin keys, they can’t just override the current system and make changes on the fly anymore, the future of Aave is in the hands of the community now.