Kulechov's Aavenomics 3.0 Would Permanently Burn AAVE, Restarting Buybacks Halted Since April 19

Aavenomics 3.0 on the Table

The Aave price has carried no direct treasury bid since April 19, when the Aave DAO suspended token buybacks to protect the protocol's balance sheet, and closing that gap is the task Stani Kulechov, Aave's founder, has now put before the community. His next-generation tokenomics framework, Aavenomics 3.0, stacks three mechanisms: buybacks funded by protocol revenue, staking rewards for committed holders, and permanent token burns. The plan makes Aave tokenomics the protocol's main lever for returning value to holders. The burn idea is not new. Kulechov said in a September 28 social media post that token burns were under consideration for the framework, and in June he proposed automating AAVE purchases from protocol revenue. What changes now is where the purchased tokens go. Under the current program, AAVE bought on the market sits in a reserve that can fund foundation operations and staking rewards. Under the new model, tokens would be withdrawn from circulation permanently, cutting supply outright rather than being held for later deployment. That ties protocol revenue to the token's value more directly than the reserve system ever did, and it echoes the case Bitwise chief investment officer Matt Hougan has made for Aave's $30 million yearly burn as central to the token's value. The open items are the ones that decide the outcome for holders: the burn size, the start date, and what share of repurchased AAVE is actually burned are all undecided, so the framework sets a direction without yet setting a schedule. A restarted buyback would restore a standing bid under the token and a burn would shrink the float, but neither takes effect until the DAO approves the details. As drafted, Aavenomics 3.0 is a revenue-allocation choice handed to token holders rather than a delivered program, and it doubles as a test of altcoin value accrual: whether protocol fees can be wired straight into a token's market.

The rsETH Hack That Stopped the Buybacks

The halt the plan would reverse traces to a single incident. On April 18, an attacker exploited a vulnerability in Kelp DAO's rsETH bridge, which runs on LayerZero, an omnichain messaging protocol that moves assets across chains, and pulled out 116,500 rsETH, Kelp's liquid staking token. About 89,567 of those tokens were sitting as collateral on Aave at the time, and the attacker used them to borrow 82,650 WETH and 821 wstETH before leaving the market. Aave's own smart contracts were never breached; the loss channel was collateral supplied from outside the protocol. Even so, the flawed deposits had financed large loans, and the protocol itself faced a loss. The response came within a day: on April 19 the DAO stopped buybacks and redirected treasury attention to financial health. Recovery was collective rather than unilateral. Aave placed 25,000 ETH from its treasury into DeFi United, the joint recovery coalition assembled after the attack, and Mantle committed a credit line of up to 30,000 ETH. Part of the attacker's haul was clawed back, the tainted collateral was unwound, and by late May the rsETH reserve shortfall had been made whole. Technical repair, however, did not restore the buyback's budget. Aave had been running a revenue-funded purchase program since April 2025, and by this past February it had deployed about $42 million to buy more than 205,000 AAVE, roughly 1.28% of total supply. The original annual budget stood at about $50 million; in March a proposal arrived to cut it to $30 million, citing declining lending fee revenue and rising operating costs. The fee decline was measurable: January lending fee revenue came in at $7.95 million, about 41% below the $13.5 million recorded a year earlier. With the rsETH incident on top of that, financial soundness and user asset protection moved ahead of token purchases, and the buyback has been suspended ever since. Resuming it requires the DAO to rebuild the treasury headroom it spent on the recovery.

The Vote That Sets the Burn Rate

No burn schedule exists yet because no governance vote has been recorded; the proposal lives in founder statements, and the April 19 halt remains the last decision the DAO actually made. Aavenomics 3.0 becomes policy only when a snapshot vote clears quorum, and the recorded outcome, not the announcement, would set the burn rate and the restart date. The exposure for AAVE holders survives either result. An approved burn sends revenue to supply reduction first, leaving liquidity and loss buffers to compete for the remainder; a rejected or delayed one keeps the treasury bid absent. And the model's payoff depends on revenue that does not exist yet, which is why Kulechov's bet that tokenized stock lending could outgrow crypto lending, and the Citi scenario where Aave runs the lending layer for tokenized treasuries, sit underneath the whole vote.