Aave DAO Votes to Launch $24 Million Token Buyback Program
The Aave Decentralized Autonomous Organization has approved a $24 million token buyback program set to begin April 9. The six-month initiative will purchase $1 million in AAVE tokens weekly, aiming to enhance the protocol's financial structure and improve stakeholder incentives.
Community support for the plan was overwhelming, with 439,000 votes in favor versus just 2,020 against. The proposal easily surpassed the required threshold of 320,000 votes. This strong backing demonstrates community alignment with the protocol's financial strategy.
The buyback plan follows a significant strengthening of Aave's financial position. Since mid-2024, the protocol's cash reserves have grown by 115% to $115 million, while its GHO stablecoin has reached a $200 million supply despite recent market conditions.
The buyback coincides with growing institutional interest in decentralized finance. Recent data from Coinbase and EY-Parthenon shows 83% of institutional investors plan to increase digital asset exposure in 2025, with DeFi playing a significant role in their strategy.
A newly formed Aave Finance Committee will manage the buyback operations and oversee the protocol's treasury. For the first month, the committee will use $4 million worth of aEthUSDT from the DAO treasury to fund purchases, with specific outcomes including:
- Weekly acquisition of $1 million in AAVE tokens
- Reduction in circulating token supply
- Implementation of financial best practices
- Evaluation of program effectiveness for possible extension
AAVE tokens have responded positively ahead of the buyback, trading at $133.50, up from $131.55 earlier this week. By reducing available supply, the program aims to support long-term token value in a model similar to traditional corporate stock repurchases.
The broader DeFi ecosystem shows promising growth potential. While only 24% of institutions currently use DeFi tools, that figure is expected to triple to nearly 75% by 2026. Staking, derivatives, and lending lead institutional use cases, followed by cross-border payments and yield farming.
Though structured as a six-month trial, the buyback could extend beyond its initial phase. Aave Chain Initiative founder Marc Zeller has suggested the timeline might be revised based on performance results.
