Aave’s tokenholders approved a governance proposal allowing the decentralized finance protocol to initiate a buyback of its AAVE governance tokens, aimed at overhauling the tokenomics of the platform. This proposal, supported by more than 99% of voters, enables the protocol to spend $4 million on AAVE tokens, sufficient for one month of buybacks, and marks the first step in a plan to repurchase $1 million worth of AAVE tokens weekly for six months. Following the news, the price of AAVE surged over 13%, boosting the protocol’s market capitalization above $2.1 billion. Aave has emphasized the buyback's goal of sustainably increasing the acquisition of AAVE tokens while benefiting the Ecosystem Reserve. The wider context includes increasing demands from DeFi protocols for mechanisms that provide tokenholders with shares of generated revenues. Aave, as a major player in this space, reported a total value locked exceeding $17.5 billion and an annualized fee income of approximately $350 million, reflecting its significant role in the DeFi ecosystem.

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