Aave Kicks Off $4M Token Buyback, Backed by Over 99% Community Support

• The first AAVE buyback proposal secured 99.63% approval.
• The full strategy is designed to execute $1 million in weekly buybacks over six months.

The Aave community has voted in favor of the first phase of its AAVE token buyback program after it was approved with a 99.63% vote on the governance forum of the platform.

Significantly, this is a step towards the deployment of the Aavenomics economic model. It is intended to encourage long-term protocol health and governance incentives.

Part of the approved proposal saw the Aave Treasury Committee (AFC) granted powers to distribute up to $4 million in aEthUSDT over approximately one month to undertake AAVE token buybacks.

The approach does not rely on direct fund transfers but employs an allowance-based mechanism. It also ensures the AFC can safely go ahead with buybacks while having control over treasury assets.

Allowance Mechanism of AAVE Adds Security and Flexibility

The proposal comes with a safe mechanism by implementing an authorization limit instead of a direct fund transfer. This protects the treasury operations. Moreover, the AFC operates within approved, governance-approved budgets, and the buyback operations start quickly to be aligned with tokenomics and overall protocol objectives.

Further, the AFC can drain USDT from the Collector contract and apply it to purchase AAVE on secondary markets or from authorized market makers. Crucially, no tokens are transferred when executing the operation. Besides, the permission may be changed or removed at any point by another governance vote.

Over the next six months, Aave plans to buy back $1 million worth of AAVE each week. The tokens will be added to the project’s ecosystem reserve. It helps to strengthen the protocol and encourage more participation in governance.

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