AAVE token jumped 21% following major DAO proposal announcement
Aave’s treasury has grown 115% to $115 million since mid-2024
Proposal includes increased profit sharing for AAVE stakers
New “buy and distribute” program would use $1M weekly for token buybacks
“Umbrella” system proposed to protect users from market crashes
The AAVE token has seen a remarkable 21% price surge in just 24 hours following the announcement of what Aave DAO calls its “most important proposal in history.” This substantial jump significantly outpaced the broader crypto market, which saw only a 3.5% increase according to the CoinDesk 20 index.
Aave, one of the leading lending and borrowing platforms in decentralized finance, has been building its financial strength steadily over the past year. The platform’s cash reserves have more than doubled since mid-2024, growing by 115% to reach $115 million. This growth demonstrates the platform’s increasing popularity and adoption among crypto users.
The GHO stablecoin, Aave’s native dollar-pegged token, has also shown impressive growth. Its total supply has now reached $200 million, indicating strong user demand and trust in the Aave ecosystem. The stablecoin has become an important source of revenue for the platform.
Financial performance has been equally strong, with Aave reporting robust revenue numbers that have put the DAO in a position to share more of its success with token holders. This positive financial situation forms the foundation for the ambitious new proposal.
The announcement came from Marc “Billy” Zeller, a key figure in the Aave community, who shared the proposal on social media on March 4, 2025. “After half a decade of hard work, with the ACI, we’re proud to present the updated Aavenomics proposal to the Aave DAO,” Zeller stated in his post.
After half a decade of hard work, with the ACI, we’re proud to present the updated Aavenomics proposal to the Aave DAO.
We consider it the most important proposal in our history, feel free to have a read and provide feedback.
The proposal, dubbed the “Aavenomics update,” builds on an initial plan that was approved in August 2024. It outlines several ways to increase value for AAVE token holders and create more benefits for users of the platform.
One of the key components of the proposal is increased profit sharing for users who stake their AAVE tokens. Staking has been a popular way for token holders to earn passive income while helping secure the network, and this change would make it even more rewarding.
The proposal also introduces an innovative concept called Anti-GHO. This special token cannot be traded on exchanges but offers two valuable options for users: it can be burned to eliminate GHO debt (essentially paying off loans for free) or converted into staked GHO (StkGHO) to earn additional rewards.
Funding for the Anti-GHO program would come from half of GHO’s revenue, which currently stands at approximately $6 million per year. This is based on GHO’s annual revenue of around $12 million, showing the stablecoin’s growing importance to Aave’s business model.
Token Buybacks and User Protection
Perhaps the most eye-catching element of the proposal is a “buy and distribute” program that would use $1 million per week to purchase AAVE tokens from the open market. This regular buying pressure could help support the token’s value while rewarding long-term users. The proposal suggests that buybacks could begin immediately and might even expand after six months.
On the safety front, the DAO has proposed a system called “Umbrella,” designed to protect users from potential losses during market downturns. According to 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 focus on user protection could give Aave a competitive edge, especially among institutional investors who are particularly concerned about risk management in decentralized finance. The proposal explicitly notes that this “unique advantage will make Aave even more attractive, especially for institutions concerned with on-chain risks.”
The timing of the proposal coincides with growing interest in DeFi platforms that can demonstrate both innovation and financial sustainability. Aave’s strong cash position puts it in an ideal place to implement these changes without compromising its financial health.
Community members now have the opportunity to provide feedback on the proposal, with discussions already underway. The DAO plans to present a formal on-chain proposal in the coming weeks, which will allow AAVE token holders to vote on these changes.
Market response to the announcement has been overwhelmingly positive, as evidenced by the 21% price increase. This suggests that investors view the proposal as a strong step forward for both the platform and token economics.
The proposal represents a major milestone for Aave as it continues to mature as one of the cornerstone protocols in the DeFi ecosystem. With these changes, Aave aims to strengthen its position while delivering more value to its community of users and token holders.
This articles is written by : Nermeen Nabil Khear Abdelmalak
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(@lemiscate) March 4, 2025
