tl;dr
Aave has proposed a significant economic overhaul, including revenue distribution, staking incentives, and liquidity management. The proposal aims to establish the Aave Finance Committee to manage treasury funds and liquidity strategies, introduce a buyback program, implement a risk mitigation syste...
Aave has proposed a significant economic overhaul, including revenue distribution, staking incentives, and liquidity management. The proposal aims to establish the Aave Finance Committee to manage treasury funds and liquidity strategies, introduce a buyback program, implement a risk mitigation system called Umbrella, finalize the transition from LEND to AAVE, and launch Anti-GHO to improve incentives for stablecoin holders. These changes are intended to enhance revenue, sustainability, and token value within Aave's ecosystem.
Aave has proposed a comprehensive update to its economic framework, focusing on revenue distribution, staking incentives, and liquidity management. The proposal, introduced by Aave Chan Initiative (ACI) founder Marc Zeller, is considered a pivotal development in Aave’s evolution. According to the proposal, Aave has consistently expanded its market presence over the past two years, building a strong financial foundation. A crucial aspect of the proposal is the establishment of the Aave Finance Committee (AFC), a governance-backed entity responsible for managing treasury funds and liquidity strategies. The AFC will oversee financial allocations within Aave’s ecosystem, ensuring sustainable revenue distribution. The initiative includes contributions from key stakeholders, including Chaos Labs, TokenLogic, Llamarisk, and ACI.
The AFC will manage a six-month AAVE buyback program to enhance token value and ecosystem sustainability, allocating $1 million weekly. Meanwhile, the program may expand based on Aave’s financial health, pending further governance approval. Aave currently incurs significant liquidity costs, amounting to $27 million annually. To optimize capital efficiency, the proposal suggests consolidating staking and liquidity management under a new system called Umbrella. The proposal also seeks to finalize the transition from LEND, Aave’s original governance token, before the 2020 upgrade to AAVE. Aave also proposes launching Anti-GHO, a new rewards mechanism designed to improve incentives for GHO stablecoin holders.