The Aave DAO has voted in favor of a significant $4 million buyback of AAVE tokens, marking the initial phase of a more extensive plan to revamp the protocol’s tokenomics.
The Aave (AAVE) DAO has officially approved a buyback scheme worth $4 million for AAVE tokens, achieving an impressive 99.63% approval rate.
This initiative empowers the Aave Finance Committee, established to oversee Aave’s treasury and financial activities, to start acquiring AAVE tokens from the open market, which will subsequently be allocated to the protocol’s Ecosystem Reserve.
The initial phase of the buyback is projected to span one month. If deemed successful, it could expand into a six-month program featuring weekly purchases of up to $1 million. This careful, phased strategy ensures responsible use of treasury funds while allowing Aave to gradually reclaim tokens from the secondary market to enhance ecosystem value.
“While maintaining a conservative approach with Aave treasury funds, the ACI believes this proposal allows the AFC to immediately initiate an AAVE buyback and distribution program at a rate of $1M per week for the first six months,” remarked Marc Zeller, founder of the Aave Chan Initiative, noted.
Zeller also indicated that the six-month duration could be prolonged if the program yields positive results. He pointed out past initiatives, like Merit, which began as a six-month program but has continued for over a year, suggesting a similar extension is probable if the buybacks perform well.
“Buybacks are a long-term strategy; the current rate is merely the pace the DAO has authorized for the next six months to begin gradually and conservatively. Just like Merit, which started for six months and is now celebrating its 16th month, this program will also likely be extended.”
This buyback initiative is part of a larger proposal launched by Zeller and the ACI on March 4 this year. Known as the Aavenomics upgrade, the plan includes:
- Umbrella – a new risk mitigation and liquidity management system designed to prevent damaging bank runs and optimize capital use.
- Anti-GHO – a non-transferable rewards token aimed at boosting incentives for users and stakers of the GHO stablecoin.
- LEND Deprecation – a final move in transitioning from Aave’s original governance token, LEND, to AAVE, expected to reclaim around $65 million in unclaimed tokens for future applications.
The community will continue to vote on subsequent components of the plan as technical development and audits proceed. In a post on X, Zeller labeled this move a “landmark achievement” and characterized the overall proposal as “the most significant in Aave’s history.”