Aave Proposes Aavenomics Improvements: Revenue Sharing and Tokenomics Optimization

Aave Proposes Revenue Sharing with Community, AAVE Price Surges 20%

On March 5, 2025, Marc Zeller, founder of the Aave Chan Initiative (ACI), introduced a proposal to upgrade "Aavenomics," which includes revising AAVE’s tokenomics, redistributing protocol revenue, phasing out the LEND token, and updating AAVE’s secondary liquidity management.

Activating the "Fee Switch" and Revenue Sharing

The most significant aspect of the proposal is the activation of the "fee switch," allowing Aave to share protocol revenue with AAVE holders through a buyback mechanism. This move comes more than six months after Aave initially consulted the community on the fee switch in July 2024. Since then, the protocol’s cash reserves have increased by 115%, reaching $115 million despite challenging market conditions.

Data : Defillama

Establishing the Aave Financial Committee and AAVE Buyback Program

ACI has proposed forming the Aave Financial Committee (AFC) to oversee treasury management and execute a structured AAVE buyback strategy. The plan includes a $1 million per week buyback over an initial six-month period, totaling $24 million. After this period, the Aave community will assess the program's effectiveness and decide on its continuation.

Optimizing Liquidity Incentives and Anti-GHO Mechanism

The proposal also seeks to optimize liquidity incentives, with projected savings of $27 million annually by adjusting staking rewards and liquidity provision mechanisms. Instead of issuing new AAVE tokens, the protocol will transition to a buyback model. Additionally, a portion of the stablecoin GHO’s revenue will be allocated to the Anti-GHO program, benefiting AAVE holders.

Market Reaction

Following the proposal’s announcement, AAVE’s price surged by 20%, reflecting strong community support for the planned changes.

This proposal represents a crucial step in enhancing Aave’s tokenomics, strengthening value accrual for AAVE holders, and solidifying the protocol’s position in the DeFi sector.