Aave Chan Reveals ‘Most Important Proposal’ for DeFi’s Leading Lender

Marc Zeller, founder of the Aave Chan Initiative (ACI), has put forward a major proposal to upgrade Aave’s tokenomics, following a successful temperature check last August. This proposal, which Zeller considers the “most important” for the platform, aims to enhance Aave’s revenue allocation, improve liquidity management, and restructure its governance systems.

One of the key elements of the proposal is the creation of an Aave Finance Committee (AFC), tasked with overseeing Aave’s $115 million treasury and introducing a fee switch that rewards important stakeholders. This committee would also manage a six-month AAVE token buyback program, with a $1 million weekly budget to buy back AAVE tokens. After the six-month period, the DAO would reassess the program’s impact to determine whether it should be expanded or scaled back.

Additionally, the proposal suggests freezing the LEND migration contract, which was the original governance token before the shift to AAVE in 2020. This would allow the recovery of 320,000 AAVE coins worth around $65 million, which are currently locked in the contract. Zeller also proposes merging staking and liquidity management under a new “Umbrella” safety system, designed to reduce Aave’s significant annual liquidity costs, which currently stand at $27 million.

Furthermore, the proposal includes the creation of Anti-GHO, a revenue distribution module for Aave’s GHO stablecoin that would reward AAVE stakers. This move is designed to enhance the incentives for holding AAVE tokens and align stakers’ interests with the long-term success of the platform.

This comprehensive proposal, dubbed Aavenomics, aims to increase the protocol’s efficiency, improve financial management, and reward its community more effectively. It marks a crucial step in the continued evolution of the Aave DAO and could have a significant impact on the protocol’s sustainability and growth in the competitive DeFi space.