AAVE Jumps 3.96% After It Proposes Major Tokenomics Overhaul

• Aave proposes a $1 million weekly buyback to enhance token stability and liquidity.
• The price of the token moved by 3.96%, rebounding from a major support level of $175.53.
• Aave’s TVL reaches $33M on Sonic within 24 hours, signaling its strong adoptability.

Aave Chan Initiative (ACI) has introduced an updated Aavenomics proposal, marking a critical shift in AAVE tokenomics. The proposal includes a six-month buyback program, allocating $1 million weekly to purchase AAVE. Following the announcement, AAVE’s price surged 3.96% to $214.90, recovering from a crucial support level of $175.53. The update also aims to redistribute protocol excess revenue, refine liquidity management, and deprecate the LEND token.

Aave Chan Initiative Proposes Structural Changes

ACI founder Marc Zeller presented an Aave Request for Comment (ARFC) proposal on Tuesday, seeking approval for the first phase of the Aavenomics update. “After half a decade of hard work, with the ACI, we’re proud to present the updated Aavenomics proposal to the Aave DAO,” Zeller stated on X. “We consider it the most important proposal in our history, feel free to have a read and provide feedback.”   

The proposal outlines multiple structural modifications, including the formation of the Aave Finance Committee (AFC), which will oversee treasury management and liquidity strategies. Additionally, the plan introduces the Anti-GHO token to replace the existing GHO discount model, aligning with Aave’s shift toward self-sustaining mechanisms.

Besides, the governance-backed proposal moves away from traditional token-based incentives, focusing on capital efficiency. Aave’s market share has increased every quarter over the last two years, accumulating substantial reserves. This financial position allows Aave to implement upgrades independently, without heavy reliance on native token incentives.

Related: Aave Eyes for $3,500: Is AAVE Poised for Explosive Growth?

Aave Hits $33M TVL on Sonic Labs in 24 Hours

Aave’s deployment on Sonic Labs saw immediate adoption, reaching $33 million in total value locked (TVL) within 24 hours. The announcement, shared on Aave’s official social media, underscores strong market confidence in the protocol’s ongoing evolution. 

Moreover, the proposal integrates liquidity management refinements to improve protocol efficiency. The AFC would supervise liquidity strategies and assets held in Aave’s collector contracts, ensuring an optimized approach to asset distribution.

Following the August 2024 approval of the last update, this new phase signals Aave governance’s commitment to sustainable ecosystem growth. By restructuring liquidity provisions and staking incentives, Aave aims to enhance its long-term financial stability.

AAVE Price Rebounds Amid Governance Developments

AAVE has demonstrated signs of recovery, bouncing off $175.53 support. Fibonacci retracement levels indicate resistance at $243.69 (50%) and $273.70 (61.80%), with a key barrier at $316.44 (78.60%). A breakout beyond these levels could push AAVE toward $370.88, while failure to sustain momentum may lead to a retest of $175.53.

Source: Tradingview

Technical indicators show mixed sentiment. The MACD reflects slight bullish momentum, with a positive histogram at 0.20, while the RSI sits at 45.02, suggesting room for further gains. The recent price movement aligns with the Aavenomics proposal, reinforcing market anticipation for the governance-backed structural changes.

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