Aave DAO Proposes Major Value Plan as AAVE Token Jumps 21%

Aave DAO, the community governance organization behind the leading lending and borrowing platform, proposed a significant plan on Tuesday outlining steps to increase value for AAVE token holders and reward users. The announcement coincided with a 21% price increase for AAVE tokens in the past 24 hours, outperforming the broader market which saw only a 3.5% gain according to the CoinDesk 20 index.

The proposal, described by Aave DAO as "the most important proposal in our history," comes as Aave's financial position has strengthened considerably. Since mid-2024, the protocol's cash reserves have grown by 115% to $115 million. The platform's GHO stablecoin has reached a $200 million supply and continues to generate strong revenue despite recent market conditions.

A key component of the plan is increased profit sharing for users who stake their AAVE tokens to support the system. The proposal introduces "Anti-GHO," a non-transferable token that can be used in two ways: burning it to eliminate GHO debt or converting it to staked GHO (StkGHO) for additional rewards. Anti-GHO will be funded by allocating 50% of GHO's revenue, which currently stands at approximately $12 million per year.

The DAO also proposed a "buy and distribute" program that would allocate $1 million weekly to purchase AAVE tokens from the open market. This initiative aims to support the token's value and provide long-term rewards to users. According to the proposal, these buybacks could begin immediately and might increase after six months.

On the technical front, the plan introduces "Umbrella," a self-protection system designed to shield users from losses during market downturns. "Aave will be the only protocol able to protect users from bad debt up to billions, as competitors have essentially given up on protecting their users," the proposal states.

The proposal also includes several structural changes:

• Creation of an Aave Finance Committee to manage holdings and define liquidity targets
• Closing the LEND migration chapter by redirecting 320,000 tokens (worth approximately $65 million) to the ecosystem reserve
• Restructuring AAVE secondary liquidity management to achieve greater efficiency

Community feedback is currently being collected, with a formal on-chain proposal expected to be presented in the coming weeks. If approved, this update would represent the most significant change to Aave's tokenomics since the platform's inception.