[ARFC] Pause AAVE Buybacks

Finance
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title: [ARFC] Pause AAVE Buybacks
author: @TokenLogic
created: 2026-04-22

Summary

Following the rsETH bridge incident on April 18, 2026, AAVE buybacks have been paused since April 19, 2026. This ARFC formalises the pause and outlines the conditions under which the buyback cadence will be reassessed.

Motivation

Overview

On April 18, 2026, an exploit on Kelp’s LayerZero rsETH bridge route caused unbacked rsETH to enter Aave V3 markets across multiple chains. The Aave Protocol Guardian and Risk Steward executed immediate defensive measures, including freezes on all rsETH and wrsETH reserves and interest rate adjustments on WETH reserves across affected deployments.

The incident, its scope, loss allocation scenarios, and potential bad debt figures are detailed in the LlamaRisk incident report and subsequent update:

Rationale for Pausing Buybacks

The range of potential outcomes for rsETH loss allocation, recovery, and any resulting DAO-level response remains wide. Until these external variables are resolved, preserving balance sheet flexibility is prudent. Deploying DAO revenue into buybacks during this window would reduce the treasury’s capacity to participate in a coordinated response should one become necessary.

For that reason, no buyback transactions have been executed since April 19, 2026. This ARFC formalizes and discloses the pause to the community.

Specification

AAVE buybacks are paused effective April 19, 2026, and will remain paused until the situation surrounding the rsETH incident becomes clearer. The cadence will be revisited at a later date, and any resumption will be communicated via the standard funding update.

Disclaimer

TokenLogic is an active service provider to the Aave DAO, the beneficiary of stream 100072 and the KPI as outlined in this publication. The scope of this engagement is available via this forum proposal.

TokenLogic supports and maintains an independent delegate voting platform within the Aave community.

TokenLogic and associated entities have no undisclosed material conflicts of interest at the time of submission.

Next Steps

  1. Gather feedback from the community.
  2. If consensus is reached on this ARFC, escalate this proposal to the Snapshot stage.
  3. If the snapshot outcome is YAE, implement the proposal.

Copyright

Copyright and related rights waived via CC0.

8 Likes
2

Token holders’ rights are consistently ignored, yet they are always the first to be harmed.

Currently, AAVE is facing significant difficulties. AAVE Labs recently secured $25 million in funding to develop new AAVE products. Now, it seems that simply keeping AAVE alive is more crucial.

Could AAVE Labs return the $51 million it planned to apply for in its “AAVE will win” proposal, along with the $25 million already applied for, to the AAVE DAO? This would provide more substantial funding to ensure adequate compensation for users who may potentially lose funds. Protecting users’ rights is the future of AAVE.

12 Likes
3

DO NOT PAUSE BUYBACKS

AAVE have seen a brutal 8 months from the highs of over $330 in summer 2025 to a mega crash in October 2025.

People trusted and invested money into the protocol because of it’s promise. In crypto no matter how good the project is and how promising the project is. It is always the price that drives the narrative.

The AAVE token after governance wars was trying to raise it’s head up again, but only to get another kick in the teeth with the hack of KelpDAO

My opinion is that the buybacks to continue. When retail sees pure token price resilience then the eroded trust will come back. So keep the buy back going.

While we are still figuring out things some people are fleeing to Spark. Buy backs should remain.

I am definitely going to VOTE NO on this one.

2 Likes
4

I support this proposal.

In the current context, the key risk for Aave is not short-term buyback optics, but broader reputational and systemic risk. The DAO should be focused on preserving long-term trust, long-term market position, and long-term protocol resilience rather than near-term token support.

For disclosure, I am also an AAVE holder, have exposure to the Safety Module, to Umbrella, and I am active on both Core and Base, including positions currently affected by the situation on Core.

In my view, restoring confidence across the full user base must be the top priority. That confidence is precisely what has been damaged in recent days and month, and it is also what has weighed on the AAVE token itself. In that sense, protecting users and preserving trust is not separate from protecting Aave’s value, it is the foundation of it.

Pausing buybacks is therefore the right decision. If we fail to prioritize users and protocol stability now, capital will continue to leave Aave for competitors. It took years to build this position in the market, and it is worth defending, even at the cost of foregoing short-term buyback activity that would never offset a broader loss of confidence and TVL.

That said, I do think the pause should be time-bounded. My preference would be for the pause to remain in place until June at the latest. If an extension is still needed at that stage, it should be brought back to governance with a new vote based on tangible developments and greater clarity on the overall resolution of the incident.

For those reasons, I actively support this proposal and intend to vote YAE.

4 Likes
5

I agree with pausing AAVE buybacks in order to preserve the size of the DAO treasury’s non-AAVE assets.

At this stage, rebuilding trust should be the priority. The DAO needs a stronger and more diversified treasury, with more non-AAVE assets on hand, rather than continuing to concentrate treasury value back into AAVE.

3 Likes
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CONTINUE BUYBACKS

Pausing Buybacks Is an Overcorrection

I understand the motivation behind pausing buybacks given the current uncertainty. However, a suspension is likely the wrong move and sends the wrong signal which risks creating longer-term damage.

1. Buybacks Are About Credibility, Not Just Price

Aave’s buyback program represents a commitment to returning value to token holders. Turning it off during stress sends a problematic signal:

Value return is conditional, not structural.

In volatile environments, consistency matters more than short-term optimization.

2. This Is When Buybacks Are Most Effective

Market dislocations are precisely when buybacks are most capital-efficient:

  • The token is typically undervalued
  • Each unit of capital deployed captures more long-term upside

Pausing now often results in resuming buybacks later at higher prices, which is economically inefficient.

3. Treasury Preservation Has Diminishing Returns

Strengthening the treasury is important, but this is not a binary decision.

The key question is:

How much capital is actually necessary to safely absorb potential losses?

Beyond a certain buffer, additional reserves provide limited marginal benefit while reducing capital efficiency.

4. Token Holders Are Already Sharing Downside Risk

In the current situation:

  • Users are absorbing losses
  • The DAO may deploy treasury resources

If buybacks are also paused, AAVE holders are left with:

  • Continued downside exposure
  • Reduced participation in upside

This creates an imbalance in incentives.

5. The Better Approach: Adapt, Don’t Suspend

Instead of fully pausing buybacks, a more robust strategy would be:

  • Reduce buyback size proportionally
  • Tie buybacks to real-time risk metrics (e.g., bad debt levels, protocol revenue)
  • Introduce circuit breakers for extreme scenarios

This maintains flexibility without abandoning long-term commitments.

Conclusion

Fully pausing buybacks prioritizes short-term caution at the expense of long-term credibility and capital efficiency.

I did say the ship must keep sailing.

A more balanced approach is to:

Continue buybacks at a reduced, adaptive rate rather than eliminating them entirely.

This preserves both treasury resilience and the integrity of Aave’s value return framework.

1 Like
7

Again here we have another vote that is a bad taste and has 37% voting abstain because we do not discuss at length and someone just cooks a proposal and sends it into snapshot. This behaviour needs to stop.
Really it is disrespectful and unwarranted.

8

The current pause makes sense for balance sheet protection but I am curious beyond reactive measures like Guardian freezes and buyback pauses, does Aave have a more proactive, structured framework to handle future cross-chain or bridge-related incidents before they escalate? Would love to understand where Umbrella and V4 fit into that long-term picture…

9

at the lows of the market too. I swear…

10

It’s bad move the price of the token is stuck under a resistance band of $93 and this is where the DAO should be accumulating for have enough AAVE for future grants.

The vote passed but it is a bad taste and it leaves bad taste in my mouth.

The arrogance of putting it to a vote just because you have the right to is really despicable.

Listen to other opinions before making such a decision.

11

Re-enable the Buy Backs

I really never understood the rational of this proposal to stop the buy backs. The protocol is now back and up and running so re-enable it.

The buy back was never supposed to go into a snapshot vote. The Aave Protocol Guardian did a freeze without a vote and did an unfreeze without a vote.

The buy back was paused without a vote and at later date a snapshot which was meaningless IMHO unless there is an ulterior motive for the pause. To me it looks fishy to pause it and I am vocal against it.

Now re-enable it. The protocol should function 24/7 just as it was before April 18

1 Like
12

yeah, paused before the vote was even done. I pointed this out on X with zero response. Shocker…