Aave Tokenholders Approve Governance Proposal to Start Buying Back AAVE Tokens

Aave's tokenholders approved a governance proposal to start buying back the decentralized finance (DeFi) protocol's governance token, AAVE

Aave, the decentralized finance protocol, saw its tokenholders approve a governance proposal to start buying back the protocol’s governance token, AAVE.

The proposal, which was approved by over 99% of AAVE tokenholders, permits the protocol to purchase $4 million in AAVE (AAVE) tokens, enough for one month of buybacks.

The move is the latest instance of DeFi protocols implementing buyback mechanisms in response to tokenholder demands.

The AAVE token's price rose by over 13% on April 9, bringing the protocol's market capitalization to more than $2.1 billion, according to data from CoinGecko.

The buyback proposal passed with overwhelming support.

Related: Aave proposal to peg Ethena's USDe to USDT sparks community pushback

Buybacks gain popularity

In March, the Aave Chan Initiative (ACI), a governance advisory group, proposed a tokenomics revamp that would include new revenue allocations for AAVE tokenholders, enhanced safety features for users, and the creation of an “Aave Finance Committee.”

Aave is Web3's most popular DeFi protocol, with total value locked surpassing $17.5 billion as of April 9, according to DefiLlama.

It is also among DeFi's biggest fee generators, with an estimated annualized fee income of $350 million, the data shows.

DeFi protocols are under increasing pressure to provide tokenholders with a share of protocol revenues — partly because US President Donald Trump has fostered a friendlier regulatory environment for DeFi protocols in the United States.

Projects including Ethena, Ether.fi and Maple are piloting value-accrewal mechanisms for their native tokens.

In January, Maple Finance's community floated buying back native SYRUP tokens and distributing them as rewards to stakers.

In December, Ether.fi, a liquid restaking token issuer, tipped plans to direct 5% of protocol revenues toward buying back native ETHFI tokens.

Similarly, Ethena, a yield-bearing stablecoin issuer, agreed to share some of its approximately $200 million in protocol revenues with tokenholders in November.