Aave DAO Proposes AAVE Buyback Plan to Boost Token Economy
1min read Aave DAO, the decentralized autonomous organization behind the aave protocol, has introduced a significant governance proposal aimed at enhancing the AAVE token economy. The proposal includes a structured AAVE buyback plan, redistribution of excess revenue, and upgrades to liquidity management. If approved, these changes will be implemented through a formal governance process.
The key objectives of the Aave DAO governance proposal are to optimize the tokenomics of AAVE, strengthen the financial structure of the protocol, and ensure sustainable growth. The proposed measures include a structured AAVE buyback program, termination of the LEND token migration, and improvements to secondary liquidity management. The initiative also introduces the Aave Finance Committee, which will oversee financial decisions and liquidity strategies. The committee will manage a weekly AAVE buyback program starting at $1 million, with provisions for expansion depending on financial conditions.
A central aspect of the proposal is the introduction of a “buy back and distribute” mechanism. Initially, Aave DAO plans to repurchase $1 million worth of AAVE each week, with the potential to increase the buyback scale based on the protocol’s financial performance. This strategy aims to enhance value for AAVE holders while improving overall liquidity. Additionally, the proposal outlines a new system for distributing excess revenue generated by the protocol. Instead of the previous model, Aave DAO suggests reallocating rewards in assets such as wETH, USDC, USDT, and AAVE to ensure that stakers benefit directly from the protocol’s revenue stream.
The governance proposal also introduces Anti-GHO, a new non-transferable ERC20 token. Anti-GHO will be distributed to AAVE and StkBPT stakers, replacing the current GHO discount model. This adjustment is intended to create a more balanced and sustainable incentive system for users participating in the ecosystem. Moreover, the proposal outlines a plan to improve AAVE’s secondary liquidity management. The objective is to reduce the annual liquidity costs of approximately $27 million by transitioning towards a more efficient liquidity model. The new model will integrate staking mechanisms and active liquidity management to enhance stability while reducing costs.
Following the release of the governance proposal, AAVE’s price experienced a notable increase. The token surged from approximately $174 to over $187, marking a rise of over 7%. As of press time, AAVE price is trading at around $186. 