The Aave DAO has officially approved a $4 million buyback plan for AAVE tokens, with the proposal receiving overwhelming support, securing 99.63% of the vote.
This proposal empowers the Aave Finance Committee (AFC), a governance-backed body responsible for overseeing Aave’s treasury and financial activities, to begin purchasing AAVE tokens on the open market. These tokens will then be allocated to the protocol’s Ecosystem Reserve, marking a key step in enhancing the value of Aave’s ecosystem.
The buyback initiative will be rolled out in phases, with the first phase lasting one month. If successful, the program could extend into a six-month initiative, with weekly purchases potentially reaching up to $1 million. This phased approach ensures that Aave deploys its treasury funds cautiously while still allowing the protocol to acquire its own tokens from the secondary market to bolster the overall ecosystem value.
Marc Zeller, founder of the Aave Chan Initiative (ACI), commented, “While staying extremely conservative with Aave treasury funds, the ACI considers this proposal can mandate the AFC to start an AAVE buyback and distribution program immediately at the pace of $1M/week for the first 6 months of the mandate.” He further explained that the six-month timeline could be extended if the buyback program proves successful, drawing a parallel to past initiatives such as Merit.
This buyback initiative is part of the larger Aavenomics upgrade, a sweeping proposal introduced by Zeller and ACI on March 4. The Aavenomics upgrade includes several key components designed to strengthen Aave’s operational capabilities. One of the significant aspects of the plan is Umbrella, a new risk mitigation and liquidity management system that aims to prevent harmful bank runs and optimize capital efficiency. Another key feature is Anti-GHO, a non-transferable rewards token designed to enhance incentives for GHO stablecoin users and stakers. The proposal also outlines the LEND Deprecation process, marking the final stage in migrating from Aave’s original governance token, LEND, to AAVE, with the goal of reclaiming roughly $65 million in unclaimed tokens for future use.
In a related development, Aave Labs founder Stani Kulechov confirmed that no new token will be introduced for Horizon, Aave’s real-world asset (RWA) initiative. This decision follows a clear consensus within the Aave DAO, marking a strategic alignment in the community’s approach to Aave’s future expansion.
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