TLDR
- Aave may buy back up to $1.75M in AAVE weekly using protocol earnings.
- The $50M buyback would be permanent and overseen by AFC and TokenLogic.
- Aave ranks second in DeFi monthly fees, boosting its token economy plan.
- BTC and ETH reserves may support growth through debt and yield assets.
Aave DAO is reviewing a major proposal that could formalize a permanent $50 million annual buyback program for its native AAVE token. The proposal, introduced by the Aave Chan Initiative (ACI), plans to use Aave’s protocol revenue to sustain weekly purchases of AAVE. This move would mark a key step in reinforcing token value mechanisms as part of a broader strategy to support Aave’s economic model.
Proposal Introduced by Aave Chan Initiative
The proposal was submitted by the Aave Chan Initiative (ACI), the DAO’s service provider led by Marc Zeller. ACI has suggested that Aave embed a permanent buyback mechanism, following the conclusion of its previous buyback program. According to ACI, the earlier initiative was successful and generated strong support within the community.
The current plan calls for using protocol revenue to buy back between $250,000 and $1.75 million worth of AAVE each week. The weekly range would allow the Aave Finance Committee (AFC) and TokenLogic to adjust the amounts depending on market conditions and available funds.
The buyback program is designed to maintain steady demand for the token, reduce supply over time, and support long-term value. ACI has emphasized that this step fits within the protocol’s economic model, known as “Aavenomics.”
Role of AFC and TokenLogic in Execution
The Aave Finance Committee (AFC), in partnership with TokenLogic, would be responsible for managing the buyback operations. Their role would include overseeing the timing, size, and method of the purchases. The teams would retain the flexibility to modify buyback amounts based on revenue flow and market changes.
The proposal also grants AFC authority to use part of the DAO’s BTC and ETH reserves. These reserves could support new growth efforts, including collateralized debt strategies or yield-bearing assets. These new capabilities aim to improve capital efficiency within the protocol and offer more tools for treasury management.
AFC and TokenLogic have already played key roles in managing the protocol’s finances and treasury deployments. The proposal builds on that experience to introduce a more structured and long-term strategy for AAVE support.
Growing Trend Among DeFi Protocols
Aave’s proposal comes at a time when several major DeFi projects are reintroducing token buybacks to boost token economics. Other protocols such as Uniswap, Pump.fun, and Raydium have also launched similar initiatives. These strategies are gaining traction as projects look to improve capital efficiency and reward token holders.
According to recent data from The Block Research, DeFi protocols have seen a recovery in fee generation, with total fees rebounding to over $600 million. Aave and Uniswap have led that growth, with Aave ranking second in monthly fees among all DeFi platforms.
The renewed focus on revenue and buybacks points to a shift in the space, where sustainability and treasury optimization are becoming key priorities.
Aave Expands Product Suite and Lending Activity
Alongside the proposed buyback, Aave continues to expand its reach in decentralized lending. The protocol has surpassed $25 billion in outstanding loans and is entering new institutional lending markets.
Recently, Aave launched Horizon, a platform allowing stablecoin borrowing against tokenized real-world assets. The deployment also marked Aave’s first move outside of the Ethereum Virtual Machine (EVM) space, launching on Aptos. In addition, the protocol is beginning to integrate Maple Finance’s yield-bearing assets as new forms of collateral.
These developments show Aave’s effort to broaden its offerings while building new revenue streams that may also support the proposed buyback program.
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