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Aave proposes $1M weekly buyback in token revamp

Aave proposes $1M weekly buyback in token revamp

GrafaGrafa2025/03/05 09:40
By:Mahathir Bayena

Aave (CRYPTO:AAVE) is considering a major tokenomics overhaul that includes revenue redistribution, a new safety system, and a token buyback program, according to a March 4 proposal by Marc Zeller, founder of Aave Chan Initiative (ACI).

The proposal introduces an “Umbrella” safety system aimed at preventing bank runs and protecting users from bad debt. It also suggests creating an “Aave Finance Committee” (AFC) to oversee financial operations.

The revenue redistribution model would retain the existing Merit program for GHO stakers while introducing a new non-transferable ERC-20 token called Anti-GHO.

“Anti-GHO will be generated by all AAVE and StkBPT Stakers,” the proposal states, with Zeller noting that Aave’s decentralised autonomous organisation (DAO) cash reserves have increased by 115% since August 2024.

The proposed safety system, Umbrella, would strengthen liquidity commitments by requiring assets to remain in the protocol until "cooldown maturity," aiming to make bank runs less damaging.

Zeller also proposed a buyback program that would allocate $1 million per week for the first six months, funded conservatively from Aave’s treasury.

“The ACI considers this proposal can mandate the AFC to start an AAVE buyback and distribute program immediately at the pace of $1M/week,” Zeller said.

The AFC would execute buybacks or collaborate with market makers to purchase AAVE from secondary markets and distribute them to the ecosystem reserve.

The proposal follows a broader trend of DeFi protocols using buybacks to increase investor confidence. In December 2024, Ether.fi introduced a buyback initiative for ETHFI stakers, and in February 2025, Jupiter, a DeFi exchange on Solana (CRYPTO:SOL), projected a $100 million annual token buyback.

According to DefiLlama, DeFi lending protocols hold a total value locked (TVL) of $39.5 billion, with Aave leading at $17.5 billion.

At the time of reporting, the Aave (AAVE) price was $210.61.

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