**Aave Unveils Exciting ‘Aavenomics’ Update: Revenue Redistribution, AAVE Buybacks, and Fresh Governance Measures! AAVE Price Soars 8% as Liquidation Risks Diminish, Indicating Enhanced Market Stability and Lending Conditions.**
Aave is making headlines in the DeFi space as the Aave Chan Initiative (ACI) rolls out what they’re calling the “most important proposal in our history.” This governance proposal, which emphasizes improvements in tokenomics and the redistribution of protocol revenue, marks a significant advancement in the implementation of the Aavenomics update. It builds on recommendations from an August 2024 governance temp check that laid the groundwork for redirecting surplus revenue to key users. As a result of these proposed changes, the value of Aave’s native token has surged by 8%.
**Aave Proposes a Major Revamp with the ‘Aavenomics’ Update**
On Tuesday, ACI founder Marc Zeller shared an Aave Request for Comment (ARFC) proposal outlining a multi-phase upgrade aimed at boosting the financial efficiency and governance structure of the Aave protocol. This proposal introduces the Aave Finance Committee (AFC), which will oversee Treasury assets and implement liquidity strategies. A key component of the plan is a six-month token buyback program, allocating $1,000,000 weekly for purchases while allowing flexibility to increase acquisitions based on the financial health of the protocol.
After five years of dedicated effort with the ACI, we’re thrilled to present the updated Aavenomics proposal to the Aave DAO. We believe this is the most significant proposal in our history, and we encourage everyone to read it and share their thoughts. Just Use Aave. [Link](https://t.co/nBhr5Q6hQB) — Marc “Billy” Zeller (@lemiscate) March 4, 2025
Zeller emphasized Aave’s robust financial position post-August, noting a 115% increase in cash reserves, now totaling $115 million, which supports long-term growth. The proposal aims to optimize secondary liquidity incentives, as current expenses for the token reach $27 million annually. The transition to the new system will occur in regular phases, ultimately establishing a cost-effective operating model that maintains market stability.
**New Features, Revenue Redistribution, and LEND Deprecation**
The proposal introduces Anti-GHO, a new fee switch system that reallocates a portion of GHO stablecoin revenue to stakers, moving away from the previous GHO discount method. Additionally, the Umbrella safety module will provide users with protection against significant bad debts. A formal deprecation of the migration contract between LEND and AAVE aims to recover 320,000 misplaced AAVE tokens valued at $65 million for the ecosystem reserve. Originally, LEND served as AAVE’s governance token before being replaced in 2020.
The plan includes gathering community feedback through off-chain Snapshot voting, followed by drafting an on-chain AIP for execution.
**AAVE Price Climbs as Community Considers Governance Proposal**
The token’s price has jumped over 8%, rising from $174.10, reflecting the community’s positive reception of the governance proposal.
