[ARFC] AAVE Buybacks program: An update

Governance
1

[ARFC] AAVE Buybacks program: An update

Author: ACI (Aave Chan Initiative)

Date: 2025-10-22

Summary

This ARFC proposes to enshrine a long-term AAVE buyback program funded by protocol revenue.

The program will establish a $50M annual budget with flexible execution parameters, enabling strategic capital deployment by the Aave DAO to further accumulate AAVE tokensnd extending the existing buyback program indefinitely.

Motivation

The Aave Protocol has demonstrated strong revenue generation and treasury growth. With the expiry of the existing buyback initiative, and the strong success of the program, we think it is a opportune time to enshrine a buyback program to further ehance Aavenomics.

The systematic buyback program will continue to add:

  1. Value Accrual: Create consistent buy pressure for AAVE tokens using protocol revenue.
  2. Treasury Optimization: Convert idle assets into productive capital supporting ecosystem growth financed by debt.
  3. Market Stability: Provide programmatic demand with adaptive execution based on market conditions.

Specification:

Program Structure

Annual Budget: $50,000,000

Lead: Tokenlogic and Aave Finance Committee (AFC)

Weekly Execution Range: $250,000 - $1,750,000 in AAVE purchases

  • The AFC will have discretion to adapt buyback volume within a 75% range, based on the following factors:
    • Market conditions and liquidity
    • Token price volatility
    • Strategic timing considerations
    • Available protocol revenue

Tokenlogic will be leading the program with the support of AFC and ACI.

Leveraging AFC reserves for growth

The AFC will have the mandate to operate AAVE, wBTC, and wETH reserves to support growth initiatives by debt creation. The HF of these positions must always be maintained above 2 as a floor, and higher as the maintenance debt level.

This proposal gives mandate to the AFC to mobilize currently unstaked wETH from the frontier program to finance growth initiative as collateral

This proposal gives mandate to the AFC to mobilize collector held BTC-equivalent reserves to finance growth initially.

The AFC has a mandate to create credit lines using the AAVE codebase exclusively, such as main Aave instances and approved by governance friendly forks, convert to yield-bearing equivalents, and vote delegation with its reserves.

Funding Sources

Protocol revenue allocation ($50M/year)

Useful Links

[ARFC] Aavenomics implementation: Part one

Disclosure

ACI (Aave Chan Initiative) has not received compensation for creating this proposal.

Next Steps

  1. Publication of a standard ARFC, collect community & service providers’ feedback before escalating proposal to ARFC snapshot stage.
  2. If the ARFC snapshot outcome is YAE, publish an AIP vote for final confirmation and enforcement of the proposal.

Copyright

Copyright and related rights waived via CC0.

15 Likes
2

Aavenomics has never looked this good. Super exciting proposal. Big time!

2 Likes
3

Supportive of this long term strategy.

How about an even ~$1M a week for a total annual budget of $52M? :grimacing:

4 Likes
4

Conflicting OCD between 1M$ per week and neat and clean 50M$ amount.

As always, I took the conservative option. Guilty as charged.

5 Likes
5

Supportive of the proposal to increase buybacks to $50M annually.

Over long term, could see as Aave Protocol grows and achieves dominance market share, buy backs could be increase to 100M, 250M, 500M, 750M and to 1B.

Long long term: 1 trillion buyback of $AAVE.

15 Likes
6

I trillion buy back? Crumbs, that will nearly be 200 Avve in 2030 Stani!

7

Great work ACI. Good for the token. Love it.

1 Like
8

Let’s go ! Thanks for working on improving aavenomics :+1:

1 Like
9

“The AFC will have the mandate to operate AAVE, wBTC, and wETH reserves to support growth initiatives by debt creation. The HF of these positions must always be maintained above 2 as a floor, and higher as the maintenance debt level.”

This paragraph means that the AFC will use its existing token reserves (BTC, ETH, AAVE) as collateral to borrow funds on Aave. Are the borrowed funds then used to conduct AAVE buybacks? Can it be understood that when the available cash within the Aave protocol is insufficient, the buyback plan can still be executed without selling the reserve assets?

10

Convert idle assets into productive capital supporting ecosystem growth financed by debt.
What does this line mean exactly? Are we going to use AAVE as collateral to borrow funds from the protocol? We saw a really severe crash on October 10th and the price dropped below 100$. I think AAVE shouldn’t have debt and keep the balance sheet in spot.

1 Like
11

I would be in favor of borrowing GHO against the ETH we have though. ETH is more reliable in market downturns and we won’t be scam wicked.

1 Like
12

Would like to see a higher floor with debt.

Overall I like this proposal with BB at 50 Milly a year and putting assets to work.

its a marathon not a sprint.

13

To be fair it never wicked below $100 on chain, it was mainly on Binance, but I do agree that we can’t rely on offshore exchanges who can crash the whole market on a 15 minutes candle.

14

Hello,

I’m against leverage for the AAVE token. We saw a collapse from $250 to $80 in a few minutes.
Leveraging AAVE carries a high risk of external attack; some actors can arrange to liquidate and tarnish AAVE’s reputation. The market always seeks liquidity and leverage.
The AAVE token should not be sold by the DAO or leveraged. I believe the AAVE token should only be used for redistribution of stkAAVE or to purchase a new project and merge the token.

I’m against leverage with the AAVE token.
I’m in favor of leverage with wBTC and ETH against $GHO, of course.

Can we have more information about the use of leverage?

I think $50M in buyback per year is reasonable. This gives AAVE investors confidence, knowing that it’s possible to redistribute AAVE’s revenue (unlike other DeFi players).
But we shouldn’t have more. I think it’s better to use as much money as possible to further develop Aave. When Aave generates $1B in revenue per year, yes, we can increase the buyback. For now, revenue is quite low, competition is fierce, we have the lead, and we must keep it and grow it.

We must focus everything on Aave’s growth and ensure that the protocol earns more and more money, and automatically, Aave’s price will reflect this.

Trillions

5 Likes
15

Very well put and deserves serious consideration.

1 Like
16

To optimize the Aave treasury and enhance the utility of $GHO, I believe implementing a conservative leverage strategy is a necessary step. However, this must be approached with a clear and risk-aware framework.

My recommendations are as follows:

  1. Leverage $GHO Against Stable Collateral: The primary leverage operation should be conducted using our existing, less volatile reserves—specifically wETH and wBTC. This provides a stable foundation for generating additional $GHO without introducing excessive risk.

  2. Avoid Leverage on $AAVE: I strongly advise against employing any leverage on the $AAVE token itself. Its historically high volatility makes it an unsuitable and risky collateral asset for this strategy.

  3. Rebalance Treasury Concentration: An analysis of our treasury (e.g., via aave.tokenlogic.xyz/treasury) reveals that approximately 50% of our reserves are in ETH. A significant concentration in a single asset exposes the treasury to unnecessary market risk.

    This is where a strategic credit line against our wETH becomes particularly valuable. By borrowing $GHO against a portion of our ETH holdings, we can diversify into other assets or initiatives. This action directly helps maintain a better-balanced treasury, reducing our over-reliance on ETH’s price performance and creating a more resilient portfolio.

In summary, a conservative leverage strategy against our wETH and wBTC reserves is desirable not only to increase $GHO’s utility but also as a prudent tool for treasury rebalancing and risk management.

2 Likes
17

Thank you everyone for your feedback and inputs.

The current proposal has been escalated to ARFC Snapshot.

Vote will start tomorrow, we encourage everyone to participate.

2 Likes
18

The current ARFC Snapshot has recently ended, reaching out both Quorum and YAE as winning option 882K votes.

Therefore [ARFC] AAVE Buybacks program: An update has PASSED.

Next step will be the publication of an AIP for final confirmation and endorsement of the proposal.

1 Like
19

Are there any plan to buyback and burn instead? Something that benefits directly to Aave holders, I wish I can see some proposals that are specifically for the benefit of diamond hands holders.

20

Symbolic burns could be interesting from a surplus however, want to point out that there is an interesting benefit of actually executing pure buybacks especially as the community is long on $AAVE. Buybacks at 1x price, that ends up being 2-10x would mean that there is more value created than buying back tokens at 1x and burning to remove the 1x value out of the system.

4 Likes