A proposal may be in the works at the decentralized lending platform Aave as deliberations about the activation of a “fee switch” to distribute fees to holders is set to get underway, according to Aave Chan Initiative founder Marc Zeller.

Zeller said, “Temp check to activate ‘fee switch’ next week,” after noting that Aave DAO — the community-driven decentralized autonomous organization (DAO) behind the Aave platform — current net profits total about $60 million per year.

Aave is a crypto lending platform primarily based on Ethereum. It allows borrowers to take out loans in one cryptocurrency and depositing another as collateral. It is governed by holders of the Aave (AAVE) token, who collectively form the Aave DAO.

In a prior post on X, Zeller hinted at the possibility of implementing fees for Aave stakers. On March 16, he wrote, “A new iteration of the safety module will suggest distributing fees to stakers.”

A “fee switch” typically refers to a feature or mechanism within a system or platform that allows for activating or deactivating specific fees or charges. In decentralized finance (DeFi) protocols like Aave, a fee switch might enable the distribution of fees collected from transactions or other activities to tokenholders or participants.

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The fee switch will allow governance to control and adjust fee-related policies based on the platform’s needs and objectives. Aave DAO recently greenlit alterations to staking fees for its stablecoin GHO to maintain the token’s peg. If Aave DAO proceeds with fee activation, it will emulate Frax Finance, which recently endorsed a proposal to reintroduce its fee switch.

However, on April 5, the AaveDAO discussed Dai (DAI) collateral restrictions. Risk management advisers from Chaos Labs presented a fresh proposal advocating a 12% decrease in Dai loan-to-value ratios (LTV) against Marc Zeller’s proposed 75% reduction.

Prior to this, Aave launched a new proposal to set DAI’s loan-to-value ratio to 0% across all Ave deployments. Additionally, the proposal recommends removing sDAI incentives from the Merit program starting from Merit Round 2 and onward. The move counters MakerDAO’s rapid D3M plan, raising the DAI credit line to about 600 million DAI a month.

Meanwhile, decentralized exchange Uniswap is in the final stages of preparation for its own fee switch proposal, expected to come in mid-April following a successful temperature check.

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