Aave DAO Proposes $1M Weekly Buyback and Anti-GHO Token to Enhance AAVE Ecosystem

• Aave DAO proposes a $1 million weekly AAVE buyback to enhance token value and liquidity.
• The introduction of Anti-GHO aims to provide stakers with direct benefits from the protocol’s revenue.
• Establishing the Aave Finance Committee is intended to oversee financial strategies and ensure effective implementation.

Aave DAO has unveiled a comprehensive governance proposal to revitalize the AAVE token economy. A structured buyback program together with redistribution of surplus revenue and liquidity management improvements are part of the proposal. The initiatives work together to strengthen the financial components and establish sustainable development for the protocol. 

The main part of this proposal includes starting a “buy back and distribute” system. Aave DAO operates a $1 million AAVE buyback plan that follows weekly schedules and may adjust quantities through evaluation of protocol finances. This plan both increases the worth of AAVE possession and improves the available liquidity pool. 

Redistribution of Surplus Revenue

This new proposal defines a method to distribute the surplus revenue resulting from the protocol operations. Under the new model proposed by Aave DAO, the rewards will be paid out in wETH, USDC, and USDT along with AAVE instead of the earlier approach. The protocol allows stakers to receive their share of direct revenue benefits through this approach. 

A notable feature of the proposal is the creation of Anti-GHO, a non-transferable ERC20 token. Anti-GHO will be distributed to AAVE and StkBPT stakers, replacing the current GHO discount model. This adjustment aims to establish a more balanced and sustainable incentive system for participants within the ecosystem. Stakers can utilize Anti-GHO to offset their GHO stablecoin debt or convert it into StkGHO, thereby enhancing their engagement with the protocol. 

Enhancements to Liquidity Management

The proposal outlines plans to improve AAVE’s secondary liquidity management. The objective is to reduce the annual liquidity costs of approximately $27 million by transitioning towards a more efficient liquidity model. The new model will integrate staking mechanisms and active liquidity management to enhance stability while reducing costs. 

To oversee these financial strategies, the proposal recommends establishing the Aave Finance Committee. This committee will manage the weekly AAVE buyback program and make necessary adjustments in response to evolving financial conditions. The designed body needs to monitor the successful execution of proposed economic solutions aimed at reaching specified targets.

After the governance proposal announcement, AAVE showed a major price boost. The token made a substantial price increase from its original value of $174 to surpass $187, which resulted in more than 7% growth. AAVE tokens currently trade at $186.69 on press day with 3.25% upwards movement during this day. 

The Aave DAO will obtain community input before starting the Snapshot voting process. An on-chain governance vote will take place after proposal approval before the proposal receives final execution. The well-defined approach provides enough space for everyone in the community to participate actively in the decision-making process.