Aave DAO Seeks Community Approval For Structured Token Repurchase Program
According to Cointelegraph, Aave's decentralized autonomous organization submitted a proposal to create a permanent token buyback program. The initiative would use up to $50 million in annual protocol revenue to repurchase AAVE tokens.
The Aave Chan Initiative submitted the proposal on Wednesday, October 22, 2025. Under the plan, the Aave Finance Committee and TokenLogic would manage weekly buyback operations. The program would repurchase between $250,000 and $1.75 million in AAVE tokens each week. Purchase amounts would vary based on market conditions, liquidity levels, and volatility.
The proposal will undergo community review through the Aave Request for Comment stage. Following feedback, a Snapshot vote and final onchain governance confirmation will occur. This buyback program differs from previous short-term interventions. The new framework aims to make buybacks a recurring component of Aave's tokenomics structure.
Impact On Token Holders And Protocol Growth
This proposal directly affects AAVE token holders by potentially reducing circulating supply over time. Sustained buyback pressure typically creates upward price support through decreased token availability. The structured approach provides predictability compared to one-time market interventions.
According to Blockworks, Aave recorded its strongest quarterly performance in Q3 2025. The protocol ranks second among DeFi platforms in monthly fee generation. Aave founder Stani Kulechov stated that Aave liquidated over $200 million in collateral during recent market volatility without disruption.
The buyback program follows Aave's successful $4 million token repurchase in April 2025. That initiative generated strong community support and preceded a 13% price increase. The new proposal scales this mechanism to institutionalize capital allocation through the DAO.
DeFi Protocols Embrace Buyback Strategies
Aave's proposal reflects a broader industry shift toward protocol-funded token buybacks. According to BeInCrypto, cryptocurrency projects spent over $1.4 billion on token buybacks in 2025. Just 10 projects accounted for 92% of total buyback activity across the sector.
Hyperliquid led the market with $645 million in repurchases during 2025. LayerZero completed a $150 million one-time buyback. Raydium allocated $100 million toward RAY token buybacks and burns. Average monthly spending hit $145.9 million as protocols use buybacks to reduce supply and support valuations.
DeFi protocols increasingly adopt buyback strategies as evidence of financial health and sustainability. Revenue-funded buybacks demonstrate that protocols generate actual earnings beyond speculative token trading. This approach mirrors corporate finance practices where mature companies return capital to shareholders. Aave's position as the largest DeFi lending protocol strengthens the buyback's potential effectiveness.
The timing coincides with preparation for Aave's v4 upgrade scheduled for Q4 2025. The upgrade will introduce modular architecture with customizable lending markets and pooled liquidity hubs. Enhanced efficiency and scalability features may drive additional protocol revenue to fund ongoing buybacks.
Further Reading
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