Aave formalizes a massive annual buyback plan financed by DeFi

Aave steps up a gear. Its decentralized autonomous organization (DAO) has just unveiled an ambitious buyback program that could redefine its treasury management. The initiative would transform occasional buybacks into a permanent policy, funded by the protocol’s growing revenues. But will this strategy be enough to sustainably support the token against fierce competition in DeFi?

An institutionalized buyback mechanism to support the token’s value

The Aave Chan Initiative (ACI) submitted a proposal Wednesday that could redefine the protocol”s tokenomics . Unlike the one-off interventions observed so far, this plan aims to permanently anchor buybacks in Aave’s governance.

The Aave Finance Committee and TokenLogic will lead the execution, with weekly buybacks calibrated according to market volatility and liquidity.

The mechanism draws directly from traditional finance practices. Like large listed companies buying back their own shares, Aave transforms its DAO into an active capital allocator.

The protocol’s treasury, fueled by substantial revenues from lending activities, has sufficient liquidity to pursue this strategy without compromising its ongoing operations.

Previous buybacks have demonstrated the effectiveness of this approach. Last April, the Aave token jumped 13% after the community approved a $4 million buyback. This market reaction validates investors’ interest in proactive management of the token’s value.

However, the proposal must still go through several stages. It will first undergo a community comment phase (ARFC), then an instant vote, before final onchain validation. This democratic process ensures decisions align with token holders’ interests.

A long-term strategy ahead of Aave’s V4 revolution

This perpetual buyback program fits into a broader vision. It complements a proposal submitted last Friday, which advocated an immediate $20 million buyback.

While this first initiative targeted a short-term market opportunity, the new proposal establishes a systematic mechanism based on clear rules.

The argument is based on solid fundamental analysis. Project supporters believe the Aave token remains undervalued relative to the protocol’s performance. 

With over $50 billion in net deposits and a dominant position on Ethereum, Aave generates recurring revenues that justify an ambitious buyback policy.

The timing of this initiative is no coincidence. It comes a few months before the deployment of Aave V4 , scheduled for Q4 2025.

This major update will notably introduce a revolutionary modular architecture, with a “hub and spoke” system that centralizes liquidity while enabling customized lending markets. This technical innovation should strengthen the protocol’s appeal to institutional investors.

In short, by adopting this perpetual buyback strategy, Aave takes a new step in its financial maturity. The protocol no longer just offers decentralized lending services. It develops sophisticated treasury management, worthy of the most advanced traditional companies. This evolution could inspire other players in DeFi and accelerate the professionalization of the entire sector.