Aave DAO Approves $4 Million Buyback Plan for AAVE Tokens

The Aave Decentralized Autonomous Organization (DAO) has approved a $4 million buyback plan for AAVE tokens, aiming to bolster the protocol's ecosystem and governance incentives. This initiative, which begins with a $4 million allocation, is part of a broader six-month program aimed at repurchasing up to $1 million worth of AAVE tokens weekly. The plan was approved with an overwhelming majority, securing 439,000 votes in favor, far exceeding the required 320,000 quorum, with only 2,020 votes opposed.

The buyback program is overseen by the newly established Aave Finance Committee (AFC), which will manage treasury activities and execute the buybacks. The initial phase involves using $4 million in aEthUSDT to fund approximately one month of AAVE token buybacks. This phased approach allows the protocol to finalize the deployment of an updated Aave Swapper contract, which will automate future buybacks and enable the DAO to monitor and adjust the program based on performance and market conditions.

Safeguards have been implemented to ensure transparency and accountability. No direct token transfers will occur from the treasury, and all spending will stay within budgets approved through governance. This structure ensures that the buyback program is executed efficiently while maintaining transparency.

Marc Zeller, founder of the Aave Chan Initiative (ACI), highlighted the potential long-term benefits of the buyback program. He noted that the DAO buybacks could own 2.5% of AAVE’s token supply by the end of the year. Zeller also suggested that the six-month timeline could be extended if the buyback proves successful, citing past initiatives like Merit, which was initially planned for six months but has run for over a year. He stated, “Buybacks are forever, the rate is just the one the DAO has voted for the next 6 months to start slow & at a conservative rate. Just like Merit, we started for 6 months and now we are celebrating 16th Month of the program, it will get renewed.”

The buyback plan is part of a broader strategy to strengthen Aave’s tokenomics and align long-term protocol incentives. By acquiring AAVE tokens from the open market, the DAO aims to reduce the circulating supply, potentially increasing the value of the remaining tokens. This move is expected to enhance the overall health of the protocol and provide additional incentives for governance participation.

The approval of this buyback plan comes at a time when the market value of AAVE has experienced a sharp decline. This initiative is seen as a proactive measure to stabilize the token's price and bolster investor confidence in the Aave ecosystem. The buyback program is expected to have a positive impact on the protocol's governance and ecosystem, fostering a more robust and sustainable decentralized finance (DeFi) platform.