Original | Odaily Planet Daily ( @OdailyChina )
Author | Dingdang ( @XiaMiPP )
As a leader in decentralized lending protocols, Aave has long been at the forefront of the market. Over the past year, the project has made frequent moves, from updating the draft of the token economic model, to working with BlackRock to promote tokenized funds, to increasing holdings in the Trump family project WLFI, all of which have attracted great attention from the market.
Yesterday, Marc Zeller, founder of Aave Chan Initiative (ACI), the Aave DAO contribution team, formally proposed a new proposal , which mainly revolves around the specific implementation details of the first phase of the Aave token economic model update , focusing on optimizing the protocol security mechanism, adjusting the functional positioning of the Aave token, opening the protocol profit distribution, and adjusting the GHO pledge module. Among them, launching the AAVE buyback plan has become the focus of market attention. The AAVE token has risen strongly by more than 20% in the past 24 hours, leading the DeFi sector.
Odaily Planet Daily will elaborate on the implementation details of this proposal in this article, analyzing its core changes and its medium- and long-term impact on the Aave ecosystem.
Core content of the proposal
In July 2024, Marc Zeller proposed a temperature check proposal to update the token economic model, which was voted through by the community and formally established in August 2024. This proposal clearly proposes to link the protocol revenue with the token value, aiming to enhance the attractiveness to token holders through a revenue sharing mechanism. However, this proposal is only a preliminary idea, and the specific implementation of the proposal will take a long time, so the adjustment of the token economic model will be carried out in three different stages.
“ After five years of hard work, we, together with ACI, are proud to submit the updated Aavenomics proposal to the Aave DAO. We believe this is the most important proposal in our history, ” said Marc Zeller .
This proposal mainly focuses on the specific implementation details of the first phase of the Aave token economic model update. According to the relevant content of the proposal, Aave is currently in good operating condition, with protocol revenue far exceeding expenses, and with sufficient financial reserves and a diversified asset structure (including ETH and stablecoins), it has favorable conditions for optimizing the economic model and enhancing the sustainability of the protocol.
Establishing the Aave Finance Committee Governance Fund Management
To ensure efficient management of Aave DAO funds, the proposal recommends the establishment of the Aave Finance Committee (AFC). The committee will be responsible for all financial allocations within the Aave ecosystem, and will monitor and assess the various financial risks faced by the protocol. In addition, formulating and executing Aaves liquidity strategy is also one of the important responsibilities to ensure that the protocol can maintain sufficient liquidity under different market conditions. The formal establishment of AFC marks Aaves greater professionalism and transparency in financial management.
Redistribution of income through agreement
The major adjustment of the protocol revenue distribution mechanism is one of the most watched measures of this proposal. The proposal proposes to introduce the Anti-GHO mechanism. Anti-GHO is a non-transferable token generated by AAVE and StkBPT stakers, which can be used to offset GHO debts 1:1 or converted to StkGHO to earn income. The purpose is to replace the existing GHO discount mechanism.
It should be noted that the issuance of Anti-GHO is directly linked to the income generated by GHO. 50% of the income will be used for the generation of Anti-GHO. 80% of the generated Anti-GHO will be distributed to tkAAVE stakers and 20% to StkBPT stakers.
This adjustment will have a profound impact on the Aave ecosystem and GHOs market positioning. First, the Anti-GHO mechanism enhances the incentives for AAVE token holders, allowing them to share the protocol revenue more directly, thereby increasing the attractiveness of AAVE staking. This will help increase the demand for AAVE tokens and thus enhance their market stability.
Secondly, the mechanism makes the GHO incentive model more sustainable by eliminating direct GHO discounts and replacing them with a protocol-based revenue distribution. GHO revenue is directly linked to Anti-GHO issuance, which means that the higher the protocol revenue, the more incentives holders receive, thus establishing a positive cycle that encourages users to use GHO more and increase its market penetration.
In addition, this mechanism adjustment also optimizes the long-term sustainability of the protocol. By guiding the reasonable distribution of protocol revenue, Aave not only increases the returns to stakers, but also reduces the inflationary pressure that may be caused by over-reliance on incentives, and promotes the protocol economic model to develop in a healthier and more stable direction.
Overall, the introduction of the Anti-GHO mechanism not only enhances the value capture capability of the Aave ecosystem, but also lays the foundation for the widespread adoption of GHO, and is expected to become an important milestone in the upgrade of the Aave economic model.
The development and auditing of the Anti-GHO mechanism may require additional time, so its final implementation may be included in the Aavenomics Phase 2 proposal.
Launch of AAVE buyback program
Using the cash reserves of Aave DAO, $1 million of AAVE tokens will be repurchased every week over the next 6 months and deposited into the ecological reserve to support long-term sustainable development. In the initial stage, AFC will be responsible for executing the repurchase operation, and the future repurchase budget will be adjusted quarterly based on the overall financial status of the protocol.
This move will have multiple positive effects on the Aave ecosystem and the AAVE token market. First, repurchasing $1 million of AAVE tokens each week and depositing them into the ecosystem reserve will effectively reduce the supply of AAVE in the market, which may in turn drive up the price of AAVE tokens. In this way, Aave not only improves the market liquidity of its own tokens, but also strengthens AAVEs position as a protocol governance tool and value storage.
Secondly, the repurchase plan will further enhance the capital reserves of Aave DAO and provide stable economic support for the long-term sustainable development of the protocol. Through continuous capital accumulation, Aave can better cope with future market fluctuations and enhance the ecological stability and long-term competitiveness of Aave.
Optimize protocol security mechanism
The Umbrella security system is officially deployed and will replace the original security module. Specifically, the bad debt reserve of the system will be managed by the new aToken module, which is funded by users who voluntarily deposit. After depositing, users will not only receive the original deposit interest income, but also receive additional security subsidies, which come from Aaves protocol income.
This move not only strengthens the security and risk management capabilities of the Aave protocol, but also promotes the healthy development of the ecosystem through innovative incentive mechanisms and enhances user trust and participation in the protocol.
The last point worth noting is that the LEND exchange window will officially close, and the approximately 320,000 AAVE that have not been exchanged will be included in the Aave ecological reserve, and their future use will be determined by governance.
Conclusion
Although the current crypto market is facing severe challenges, price fluctuations have intensified, and investor confidence has been affected, Aave still insists on steady layout during the market downturn. Through continuous optimization of the token economic model, enhanced protocol security, and improved user incentives, Aave has not only enhanced the stability of the ecosystem, but also maintained its competitive advantage in the market uncertainty. As the market gradually returns to rational investment, Aaves long-term development potential and robust economic model are expected to become one of the preferred choices for market capital repatriation.
