Aave DAO Proposes Major AAVE Buyback Plan and Liquidity Upgrade

Aave DAO has introduced a major 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.

Aave DAO Governance Proposal and Key Objectives

According to a release, Aave DAO has put forward a proposal focusing on optimizing the tokenomics of AAVE.

The proposed measures include a structured AAVE buyback program, termination of the LEND token migration, and improvements to secondary liquidity management. The initiative aims to strengthen the financial structure of the protocol while ensuring sustainable growth.

The proposal also introduces the Aave Finance Committee, which will be responsible for overseeing 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. If approved, the changes will progress through Snapshot voting before execution by the Aave Finance Committee.

AAVE Buyback and Redistribution of Excess Revenue

A key 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.

The buyback scale may increase 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. This approach is designed to ensure that stakers benefit directly from the protocol’s revenue stream.

Introduction of Anti-GHO and Secondary Liquidity Upgrades

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.

AAVE Price Jumps Following Announcement

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 $186.69, reflecting a daily increase of 3.25%.

According to the market trend, AAVE price is currently attempting to stabilize near the $180 support level. However, the AAVE price remains in a bearish trend, with resistance levels identified at $200 and $240.

Despite this, technical indicators such as the Relative Strength Index (RSI) and Money Flow Index (MFI) suggest that selling pressure is easing, potentially leading to a price rebound in the short term.

In the meantime, Aave DAO’S next steps involve gathering community feedback before advancing to the Snapshot voting stage. If approved, the proposal will move to an on-chain governance vote before final execution.