Aave's decentralized autonomous organization (DAO) recently proposed the creation of a long-term protocol funding buyback plan, which will utilize up to $50 million in revenue annually to repurchase Aave tokens.
The proposal submitted by the Aave Chan Initiative (ACI) on Wednesday aims to establish the buyback mechanism as a permanent component of Aave's tokenomics. According to the plan, the Aave Financial Committee (AFC) and TokenLogic will be responsible for executing operations, repurchasing between $250,000 and $1.75 million worth of Aave (AAVE) tokens weekly, with the specific amount depending on market conditions, liquidity, and volatility.
If approved, the proposal will first enter the ARFC stage to gather community feedback, followed by a Snapshot vote, and ultimately confirmed through on-chain governance. Unlike short-term market interventions, this proposal aims to institutionalize the buyback as a cyclical mechanism, effectively making the DAO an active capital allocator.
ACI noted that the plan builds on the successful experiences of other buyback programs. In April of this year, Aave's value increased by 13% after the community approved a $4 million token buyback plan.
This $50 million buyback proposal is a further expansion of an earlier plan proposed on Friday, which called for an immediate execution of a $20 million buyback to take advantage of the undervalued market opportunity for Aave tokens.
The earlier plan argued that the token was severely undervalued relative to its fundamentals.
The plan's justification pointed out that Aave's treasury has sufficient cash surplus to execute the buyback without affecting its operating expenses or reserves.
While the $20 million plan was designed as a short-term measure, the latest proposal seeks to make the buyback a permanent mechanism, directly integrating it into the DAO's governance and treasury management system. This move will shift Aave from an opportunistic market response model to a systematic, rules-based capital strategy, similar to corporate financial management styles.
The emergence of this buyback framework proposal coincides with the upcoming Aave v4 upgrade, set to launch in the fourth quarter of 2025.
This milestone upgrade is expected to redefine the protocol's economic and technical architecture, introducing a modular "hub-and-spoke" design.
This will allow for the creation of customized lending markets while aggregating liquidity through the "hub," enhancing efficiency and scalability.
The upgrade will also increase dynamic risk allocation capabilities, reducing liquidation risks across multi-asset portfolios.
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Original: “Aave DAO proposes to implement an annual $50 million token buyback plan using DeFi revenue”
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