"Aave's 'Aavenomics' Revamp: Buybacks, Fee Mechanism, and Anti-GHO Token"

Aave, a leading decentralized finance (DeFi) protocol, has proposed a significant revamp of its tokenomics, revenue distribution, and liquidity management. The Aave Chan Initiative (ACI), led by founder Marc Zeller, introduced the new proposal following a community-approved TEMP CHECK.

The Aave Request for Comment (ARFC) proposal, dubbed "Aavenomics," represents the culmination of five years of development. It introduces several key changes, including the creation of the Aave Finance Committee (AFC), which will oversee treasury operations and spearhead a "Buy and Distribute" program. Under this program, the committee will repurchase AAVE tokens from secondary markets at a rate of $1 million per week for the first six months, with the possibility of increasing the buyback rate depending on the protocol's financial position.

This buyback program is expected to reduce AAVE's circulating supply, making the token scarcer and more valuable. Additionally, activating the fee mechanism will create a new revenue stream for the protocol, further increasing demand for AAVE tokens.

Another significant shift involves AAVE stakers. The update eliminates slashing risks for those staking in StkBPT, providing a significant relief for participants. However, this comes with a phased reduction in StkBPT rewards as Aave transitions to a hybrid model favoring liquidity incentives over traditional staking payouts.

The proposal also closes the LEND to AAVE migration contract, redirecting 320,000 AAVE tokens—valued at roughly $65 million—back to the ecosystem reserve. This move aligns with Aave's strategy to prioritize real revenue over inflationary token emissions.

A centerpiece of the update is Anti-GHO, a non-transferable ERC20 token that replaces the current discount mechanism. Holders can burn it at a 1:1 ratio to offset GHO borrowing costs, acting as a discount mechanism. Additionally, they can convert it into StkGHO via the Merit system for later redemption as GHO after a cooldown. Aave has earmarked 50% of GHO revenue—approximately $6 million annually—for this program, with 80% allocated to AAVE stakers and 20% to StkBPT holders.

Aave's new Umbrella mechanism aims to protect users from bad debt while fortifying