Aave DAO greenlights $1 million weekly token buyback amid market decline

DeFi’s largest protocol, the Aave decentralized autonomous organization (DAO), has officially approved a $1 million token buyback initiative that will start on April 9.

The proposal secured 439,000 votes in favor, well above the required 320,000 quorum, while only 2,020 votes opposed it.

This move is part of a broader plan to strengthen Aave’s tokenomics and align long-term protocol incentives.

Meanwhile, the development coincides with a sharp price decline in AAVE’s market value. According to CryptoSlate’s data, the token has dropped nearly 21% in the past 24 hours, trading at approximately $120 as of press time.

Considering this, Marc Zeller, founder of the Aave Chan Initiative (ACI), said:

“DAO buybacks will own 2.5% of [AAVE’s token] supply by year’s end.”

First phase to begin with $4 million allocation

The newly passed proposal introduces several key updates to Aave’s financial governance. It establishes the Aave Finance Committee (AFC), which will oversee treasury activity and buyback execution.

The initial phase grants the AFC access to $4 million in aEthUSDT to fund approximately one month of AAVE token buybacks. However, the whole program aims to repurchase up to $1 million worth of AAVE weekly over six months.

This phased approach allows the protocol to finalize deploying an updated Aave Swapper contract, which will automate future buybacks. It also enables the DAO to monitor and adjust the program based on performance and market conditions.

Safeguards are built into the structure. No direct token transfers will occur from the treasury, and all spending will stay within budgets approved through governance. This ensures transparency while allowing timely execution.

Meanwhile, Zeller hinted that the six-month timeline could be extended.

He cited past initiatives like Merit, which was initially planned for six months but has run for over a year. He noted that similar extensions are likely if the buyback proves successful.

He stated:

“Buybacks are forever, the rate is just the one the DAO has voted 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 16th Month of the program, it will get renewed.”