Aave DAO, the autonomous organization behind the innovative lending and borrowing platform, has put forward a significant proposal aimed at enhancing the value of the AAVE token while simultaneously rewarding its user base. This initiative, known as the “Aavenomics update,” was first approved in August 2024, but its details were freshly outlined on Tuesday.
In a notable development, AAVE tokens have surged by 21% within the last 24 hours, outpacing the broader market’s modest 3.5% increase as captured by the CoinDesk 20 (CD20). Should the proposed adjustments receive community support, it is anticipated that the underlying fundamentals of holding AAVE tokens will be significantly strengthened.
One of the key elements of the proposed update is the intention to amplify profit-sharing incentives for users who stake their AAVE tokens to lend support to the Aave ecosystem. This move is designed to draw more participation and further community engagement.
Additionally, the proposal introduces a novel token referred to as Anti-GHO. This token, which is non-tradable, offers users two unique functionalities: it allows for the burning of GHO debt, effectively enabling users to pay off their loans at no cost, or it can be converted into staked GHO (StkGHO) to earn additional rewards. Notably, Anti-GHO will be funded by half of GHO’s annual revenue, which currently stands at $6 million, reflecting GHO’s total annual earnings of $12 million.
Aave DAO also seeks to implement a “buy and distribute” strategy, committing $1 million weekly to purchase AAVE tokens from the open market. This initiative aims to stabilize the token’s value while ensuring consistent rewards for the user community, with the potential to increase the buyback amount in the ensuing six months.
From a technical perspective, the DAO’s proposal includes the deployment of “Umbrella,” a bespoke self-protection system designed to safeguard users from losses during market downturns. As articulated in the proposal, “Aave will be the only protocol able to protect users from bad debt up to billions, as competitors have essentially given up on protecting their users.” This feature is expected to bolster Aave’s appeal, particularly among institutional investors who are increasingly concerned about on-chain risks.
Community feedback on the proposal opened Wednesday morning, with a formal on-chain proposal anticipated in the weeks ahead. Aave continues to position itself as a leader in the DeFi space, promising innovations that not only enhance user engagement but also contribute to the overall stability and attractiveness of the AAVE token.
