Aave DAO Proposes Permanent $50 Million Annual Buyback for AAVE Tokens

• Aave DAO introduces a long-term buyback initiative using up to $50 million yearly from revenue to buy back AAVE tokens.

• The program, led by Aave Finance Committee and TokenLogic, targets weekly repurchases of $250,000 to $1.75 million based on market conditions.

• Approval process includes community feedback via ARFC, Snapshot vote, and onchain governance, following a prior $20 million buyback proposal on October 17.

Aave buyback proposal seeks to make $50M annual token repurchases permanent, boosting AAVE value amid undervaluation. Explore DAO governance impacts and v4 upgrade ties. Stay informed on DeFi evolution—read on for key details.

What is Aave’s Buyback Proposal?

Aave’s buyback proposal involves creating a permanent, protocol-funded program to repurchase up to $50 million worth of AAVE tokens annually using revenue generated by the decentralized lending platform. Submitted by the Aave Chan Initiative on Wednesday, it positions the DAO as an active capital allocator, executing weekly buys ranging from $250,000 to $1.75 million depending on liquidity and volatility. This initiative expands on earlier efforts, aiming to address token undervaluation and strengthen long-term tokenomics.

The new proposal would make Aave’s $50 million annual buyback a permanent feature, expanding on the success of previous buyback initiatives.

Aave’s decentralized autonomous organization (DAO) has introduced a proposal to create a long-term, protocol-funded buyback program that would use up to $50 million in annual revenue to repurchase Aave tokens.

The proposal, submitted Wednesday by the Aave Chan Initiative (ACI), seeks to make buybacks a permanent component of Aave’s tokenomics. Under the plan, the Aave Finance Committee (AFC) and TokenLogic would lead the execution, repurchasing $250,000 to $1.75 million in Aave (AAVE) tokens weekly, depending on market conditions, liquidity and volatility.

If approved, the proposal will proceed through the Aave Request for Comment (ARFC) stage for community feedback, followed by a Snapshot vote and final onchain governance confirmation. Unlike short-term market interventions, the proposal aims to institutionalize buybacks as a recurring mechanism, essentially making the DAO an active capital allocator.

The ACI said the program builds on the success of other buyback initiatives. In April, Aave soared by 13% as the community approved a $4 million token buyback.

Aave buyback program proposal summary. Source: Aave governance

How Does the Buyback Plan Build on Previous Initiatives?

The $50 million buyback proposal follows an earlier initiative proposed on October 17, which advocated for an immediate $20 million repurchase to address AAVE’s undervaluation relative to its strong fundamentals. According to discussions in Aave’s governance forums, the protocol’s treasury holds sufficient surplus to fund such actions without affecting operations or reserves. Data from past events shows that the April $4 million buyback led to a 13% price increase, demonstrating the strategy’s potential impact on token value.

This new plan shifts from one-off measures to a systematic approach, embedding buybacks into ongoing treasury management. Experts in DeFi governance note that this mirrors traditional corporate strategies, potentially attracting institutional interest. TokenLogic, a key executor, has emphasized market-responsive execution to minimize volatility, with historical AAVE trading volumes averaging over $200 million daily supporting feasible implementation.

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Frequently Asked Questions

What is the Approval Process for Aave’s Buyback Proposal?

The process starts with the Aave Request for Comment stage for community input, followed by a Snapshot vote off-chain, and concludes with onchain governance confirmation. This multi-step approach ensures broad DAO participation and transparency, typically taking 2-4 weeks based on prior proposals.

Why is Aave Implementing a Permanent Buyback Program Now?

Aave is pursuing this to capitalize on current token undervaluation and solidify its tokenomics ahead of major developments like the v4 upgrade. Community leaders highlight that recurring buybacks will enhance long-term value, making the protocol more resilient in fluctuating markets—ideal for voice searches on DeFi strategies.

Aave’s Buyback Push Comes Ahead of v4 Upgrade

The proposed buyback framework comes ahead of the upcoming Aave v4 upgrade slated for the fourth quarter of 2025.

The milestone is expected to redefine the protocol’s economic and technical architecture, introducing a modular “hub and spoke” design.

This will allow customizable lending markets while pooling liquidity through “hubs,” improving efficiency and scalability.

It will also add dynamic risk configurations, which reduce liquidation risks across multi-asset portfolios.

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Key Takeaways

• Permanent Buyback Mechanism: Aave’s DAO plans to allocate up to $50 million annually for AAVE token repurchases, led by AFC and TokenLogic for steady market support.
• Proven Success: Building on a $4 million buyback that boosted AAVE by 13% in April, this initiative addresses undervaluation with surplus treasury funds.
• Strategic Timing: Aligned with the Q4 2025 v4 upgrade, the program enhances tokenomics and prepares for modular lending improvements—consider monitoring governance votes for participation.

Conclusion

Aave’s buyback proposal marks a pivotal step in DeFi governance, institutionalizing $50 million annual AAVE repurchases to combat undervaluation and optimize treasury use. As seen in secondary initiatives like the October $20 million plan, this approach draws from successful precedents while gearing up for the transformative v4 upgrade. With expert insights from Aave Chan Initiative underscoring its viability, the protocol is poised for sustained growth—DAO members and investors should engage in upcoming votes to shape this enduring strategy.