AAVE, the native token of the decentralized finance (DeFi) lending protocol Aave, has surged by more than 26% in the last 24 hours following the unveiling of a game-changing proposal by the Aave decentralized autonomous organization (DAO).
Data from CoinMarketCap shows AAVE trading at $220 by the time of writing after a 26.6% surge within 24 hours. The cryptocurrency’s market cap is also up to $3.33 billion, while its 24-hour trading volume has more than doubled to $728.45 million.
Aave’s “Most Important” Proposal
On March 4, Aave Chan Initiative (ACI) founder Marc Zeller announced that the organization had presented an Aave Request For Comment (ARFC) titled Aavenomics Implementation: Part One. The proposal, considered the most important in the protocol’s history, contains updated Aavenomics for the DeFi lending platform and seeks community feedback.
Aavenomics implementation: Part one builds on the [TEMP CHECK] Aavenomics update, which the community approved in August 2024. The TEMP CHECK proposed creating a clear path for Aave to redistribute net excess revenue to key ecosystem contributors.
The new proposal aims to implement the first part of the Aavenomics presented in the TEMP CHECK, including the excess revenue redistribution, updating AAVE tokenomics, and managing the asset’s secondary liquidity protocol. In addition, Aave is looking to finalize the migration from LEND, its previous governance and utility token, to AAVE.
Creating AFC And Managing Liquidity
The first implementation of Aavenomics has six main focus points. The ACI is looking to form a four-member Aave Finance Committee (AFC) with a 3/4 signature threshold consisting of itself, the DeFi economic security systems provider Chaos Labs, the DeFi solutions provider Tokenlogic, and the DeFi risk management entity Llamarisk.
The ARFC also proposes authorizing Tokenlogic to implement financing for the proposed budget for the first six months of Aavenomics. This will be made possible through monthly treasury management proposals and setting token approval allowances.
For Aave’s liquidity management, the proposal aims to implement a buyback and distribution program that will mandate the AFC to use treasury token allowances to acquire AAVE on secondary markets and return them to the ecosystem reserve. This program will begin with a $1 million per week AAVE acquisition for the first six months, followed by an amount tailored to the overall protocol budget.
Additionally, this first part of the Aavenomics implementation will see the development of new features. One of them is the Anti-GHO, a non-transferable ERC20 token that can be used to clear GHO debt or converted to staked GHO (StkGHO). GHO is Aave’s stablecoin, which has hit a circulating supply of at least $200 million. Another is Umbrella, a system that will protect users from bad debt in case of market crashes.
Meanwhile, the ACI revealed that Aave’s cash pile has increased by 115% to $115 million since mid-2024.
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