The Aave community, one of the largest DeFi protocols, has proposed a radical update to the AAVE token economic model. Aave founder Stani Kulechov called the new system "fee switch on steroids", while Aave Chan Initiative lead Marc Zeller described it as "the most important proposal in the project's history."
Key Changes
On March 4, Aave DAO introduced the Aavenomics proposal, featuring several major upgrades:
- Aave Finance Committee (AFC): A new governance body overseeing protocol revenue distribution.
- Umbrella Security System: A revamped protection mechanism for risk management and liquidity stability.
- No More Staker Token Burns: AAVE stakers will no longer risk losing their tokens as part of protocol insurance.
- AAVE Buyback: Over the next six months, $26 million worth of AAVE will be repurchased, followed by quarterly buybacks.
- Expanded Rewards Program: Excess Aave revenue will be redistributed to Atokens holders.
Growth Strategy
According to DeFiLlama, Aave remains the second-largest DeFi platform, with $18.28 billion TVL and a market cap of $2.8 billion. It dominates the lending sector, with its closest competitor, JustLend, at only $3.64 billion TVL.
- Aave DAO currently holds $115 million in liquid assets.
- The Smart Value Recapture (SVR) system by Chainlink is expected to increase protocol revenue.