Aave Proposes New Tokenomics, Shifting Revenue and Liquidity Management

• The tokenomics update includes the creation of an Aave Finance Committee to oversee treasury operations and fund allocation.
• A new system called Anti-GHO would replace the current GHO discount model, allowing stakers to reduce debt or earn rewards.
• The proposal suggests adjustments to AAVE’s secondary liquidity incentives to maintain efficiency while lowering costs.
• A buyback program is also included, with governance allocating funds to purchase AAVE from the market and direct it to the ecosystem reserve.

Aave governance has introduced a proposal to update its tokenomics, focusing on AAVE staking rewards, revenue redistribution, secondary liquidity management, and the deprecation of LEND.

After half a decade of hard work, with the ACI, we’re proud to present the updated Aavenomics proposal to the Aave DAO.

We consider it the most important proposal in our history, feel free to have a read and provide feedback.

Just Use Aave.https://t.co/nBhr5Q6hQB

A governance post published by Aave Chan Initiative (ACI) founder Marc Zeller on March 4 details the first phase of implementing the Aavenomics update.

Governance Proposal Seeks to Implement Aavenomics Update

The proposal follows the previous update approved in August 2024 and introduces structural changes affecting AAVE holders and liquidity providers.

According to the post, Aave’s market share has increased every quarter for the past two years. The protocol has also built up significant cash reserves, allowing it to finance updates without depending on token-based incentives.

The proposal includes the creation of an Aave Finance Committee (AFC), a governance-backed entity tasked with treasury management and revenue allocation. The AFC would oversee funds held in Aave’s collector contracts and manage liquidity targets.

Aave’s Financial Position and Proposed Adjustments

A key element of the plan introduces Anti-GHO, a non-transferable ERC20 token designed to replace the existing GHO discount model. Anti-GHO would be distributed to AAVE and StkBPT stakers and could be either burned at a 1:1 ratio against GHO debt or converted into StkGHO.

The protocol’s financial reserves have increased since the Aavenomics approval, despite a downturn in interest rates. The proposal states that the protocol maintains dominance in lending revenue, allowing it to fund incentives with stable assets rather than issuing native tokens.