"Aave Revolutionizes Tokenomics: New Revenue Model, Safety System, and Buyback Plan"

Aave, a leading decentralized finance (DeFi) lending protocol, has proposed a significant revamp of its tokenomics, including a new revenue redistribution model and an enhanced safety system. The proposal, unveiled by Marc Zeller, founder of the Aave Chan Initiative (ACI), aims to strengthen the protocol's resilience and sustainability.

The revamp includes a new revenue redistribution model that maintains the existing distribution for GHO stakers, also known as the "Merit" program. Additionally, a new non-transferable ERC-20 token called Anti-GHO will be introduced. Anti-GHO will be generated by all AAVE and StkBPT stakers, with the current cash reserves in Aave's decentralized autonomous organization (DAO) expected to cover both the Merit program rewards and Anti-GHO generation.

The proposal also introduces the "Umbrella" safety system, an upgraded version of Aave's safety module. This system aims to protect users from bad debt up to billions and create a commitment of liquidity that remains in the protocol until "cooldown maturity." Zeller believes this will make bank runs less harmful and facilitate the development of new products and revenue streams.

Furthermore, Zeller proposed a token buyback and redistribution plan. The Aave Finance Committee (AFC) would be mandated to initiate an AAVE buyback and distribution program at a pace of $1 million per week for the first six months. TokenLogic, a financial services provider for the Aave DAO, would size these buybacks according to the protocol's overall budget, with the objective of eventually matching and even surpassing all protocol AAVE spending.

This proposal comes as DeFi lending protocols continue to grow in popularity. According to DefiLlama, DeFi lending protocols have $39.5 billion in total value locked (TVL), up from $10.6 billion on Dec. 30, 2022. Aave ranks No. 1 for TVL with $17.5 billion and has amassed $8.3 million in fees in the past seven days. In January 2025, the protocol hit $33.4 billion in net deposits, surpassing 2021 levels.

As the DeFi sector expands, various protocols are exploring buyback strategies to increase investor confidence and allow stakeholders to share in revenue. In December 2024, Ether.f