Aave Surges 20% on Governance Proposal, Long-Term Holders Move Coins

AAVE, a leading decentralized finance (DeFi) token, has surged by 20% in the past 24 hours, outperforming the broader market. This significant jump follows the announcement of a new governance proposal aimed at restructuring the protocol's tokenomics.

The proposal, introduced by Aave Chan Initiative (ACI) founder Marc Zeller on March 4, seeks to revise AAVE tokenomics, redistribute protocol excess revenue, deprecate the legacy LEND token, and launch Anti-GHO to improve incentives for GHO stablecoin holders. The positive community reaction to this move has fueled a rise in demand for AAVE, driving its price up by 20% over the past day.

The double-digit rally in AAVE's price has also led to a spike in its age-consumed metric, which measures the movement of long-held coins. According to Santiment, this metric totaled 11.66 million on Tuesday, indicating that long-term holders are moving their tokens. This shift in market trends suggests that long-term holders may be offloading their coins, potentially increasing selling pressure on the asset.

Moreover, the uptick in AAVE's exchange inflow on Tuesday confirms this selling activity. Per Santiment, this metric, which measures the amount of an asset sent to exchanges, climbed by 114% during the review period. A spike in an asset's exchange inflow typically signals high selling activity, which may put downward pressure on AAVE's price and cause it to shed its recent gains.

At press time, AAVE trades at $211.45, slightly above the support formed at $199.80. If selloffs continue, the bulls may struggle to defend this support level, potentially leading to a decline toward $145.42, a low it last reached in November 2024. However, if the current uptrend persists and new demand for AAVE strengthens, it could drive its price up to $238.