- Aave proposes an ‘Aavenomics’ update, introducing revenue redistribution, AAVE buybacks, and new governance measures.
- AAVE price jumps 8% as liquidation risks drop, signaling stronger market stability and improved lending conditions.
Aave is making waves in the DeFi sector as the Aave Chan Initiative (ACI) introduces what it calls the “most important proposal in our history.” The governance proposal, which focuses on tokenomics improvements and protocol revenue redistribution, is a significant step toward implementing the Aavenomics update.
The initiative implements recommendations from an August 2024 governance temp check that established the basis for redirecting surplus revenue to important users. The proposed changes triggered an 8% increase in the value of its native token.
Aave Proposes Major Overhaul with ‘Aavenomics’ Update
On Tuesday, ACI founder Marc Zeller posted an Aave Request for Comment (ARFC) proposal detailing a multi-phase upgrade designed to enhance the Aave protocol’s financial efficiency and governance structure. The proposal establishes the Aave Finance Committee (AFC) as the body to manage Treasury assets and implement liquidity approaches.
The plan includes a six-month token buyback program that devotes $1,000,000 weekly towards purchases yet retains the freedom to boost acquisitions based on financial protocol conditions.
After half a decade of hard work, with the ACI, we're proud to present the updated Aavenomics proposal to the Aave DAO.
We consider it the most important proposal in our history, feel free to have a read and provide feedback.
Just Use Aave.https://t.co/nBhr5Q6hQB
— Marc “Billy” Zeller 👻 🦇🔊 (@lemiscate) March 4, 2025
Zeller highlighted Aave’s financial health after August by stating that cash reserves were boosted by 115% to reach $115 million, which supports long-term growth. The proposal seeks to optimize secondary liquidity incentives because these current expenses amount to $27 million each year for the token. The system transition progresses through regular stages until it establishes an operating model that lowers costs with balanced market stability.
New Features, Revenue Redistribution, and LEND Deprecation
The proposal brings Anti-GHO as the new fee switch system, which takes part of GHO stablecoin revenue to distribute it among its stakers instead of the earlier GHO discount method. The Umbrella safety module enables users to receive protection from large-scale bad debts.
A formal deprecation of the migration contract between LEND and AAVE intends to collect 320,000 misplaced AAVE tokens worth $65 million for the ecosystem reserve. The initial governance token of AAVE was LEND, but it was replaced with AAVE in 2020.
The plan consists of collecting community input through off-chain Snapshot voting, after which an on-chain AIP must be drafted for execution.
AAVE Price Rises as Community Weighs Governance Proposal
The token’s price surged over 8%, climbing from $174.10 to $187.71 following the announcement of the governance proposal. Market data from TradingView shows it is attempting to stabilize near the $180 support level, though resistance remains at $200 and $240. Despite an overall bearish trend, indicators like the Relative Strength Index (RSI) and MACD suggest declining selling pressure, which could signal a short-term rebound.
Meanwhile, Aave DAO’s next steps involve gathering community feedback before moving to an off-chain Snapshot vote. If approved, the proposal will advance to an on-chain governance vote (AIP) for final execution. With the buyback program, revenue redistribution, and liquidity optimizations in focus, the proposal aims to strengthen the protocol’s long-term sustainability. Investors and stakeholders are closely watching how these governance changes will shape Aave’s future in the DeFi ecosystem.
Current crypto market prices at February values indicate that risk management and lending practices have demonstrated substantial improvement. The future success of Aave in the DeFi market hinges on how well its community evaluates and shapes governance strategies for Aavenomics during its ongoing assessment period.
