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- The first phase of the AAVE BuyBack program has started with USDT expected to be pulled from the collector Contract.
- $4 million has been approved to buy back tokens from the secondary market over an approximate period of one month.
AAVE DAO has taken the initial step towards updating its tokenomics as it approves a $4 million token buyback. According to the report, the community solely took this decision with 99.63% of its eligible voters giving a “thumb up” to this proposal. Fascinatingly, this follows the plans highlighted in the Aavenomics Part One Proposal to initiate a “Buy and Distribute” program to increase the token acquisition from the open market and allocate it to the Ecosystem reserve.
With the official approval, the Aave Finance Committee (AFC) is reported to be working towards the initial phase of the buyback program with an approval of $4M in aEthUSDT. The program ensures that $1 million is used for the buyback each week. This implies that the $4 million would allow a buyback exercise of up to one month. Meanwhile, the program is expected to continue for six months.
According to the founder of the AAVE Chan Initiative Marc Zeller, the six months may be extended if the program tends to go as planned.
Buybacks are forever; the rate is just the one the DAO has voted for for the next 6 months to start slow & at a conservative rate. Just like Merit, we started for 6 months, and now we are celebrating the 16th Month of the program; it will get renewed.
In a detailed report, the AAVE team explained that the initial phase would “buy time” to finalize and launch its much anticipated Aave Swapper contract. According to them, this would be used for the buyback by securing treasury operations with no direct token transfer.
The allowance mechanism is also reported to support the program by checking the AFC to ensure that its operations are within a defined governance-approved budget. Apart from these, it would also support the commencement of the buyback program without delay while supporting tokenomics upgrades and protocol alignments.
The whole operation is designed to work by simply pulling USDT from the Collector Contract to perform the buyback operation on the secondary market.
Previous Proposals Submitted to the AAVE Community
Our research shows that the BuyBack initiative is just one of the several proposals introduced last month to significantly redefine the ecosystem. According to reports, the LEND Deprecation was another proposal introduced to finalize the migration from Aave’s native governance tokens – AAVE and LEND. Apart from this, Umbrella was also proposed to act as a new risk mitigation and liquidity management system, as mentioned in our previous report.
Aave has, over the years, doubled down its effort to rub shoulders with heavyweight projects in the DeFi sector through new proposals and partnerships. As part of this, it has collaborated with Chainlink to integrate its Smart Value Recapture (SVR) service to boost protocol income, as we covered in our latest report.
Also, the team recently proposed a product dubbed Horizon to support the building of Decentralized Finance (DeFi) initiatives. Interestingly, this later raised concerns of a possible new token which experts pointed out that it could affect the growth of the existing AAVE asset. As highlighted in our previous news article, AAVE Labs founder Stani Kulechov has, however, clarified that the Horizon initiative would have no new token.
