Aave joins the dividend army: over 100 million cash reserves start repurchases, which may be supported by positive DeFi policies

Author: Nancy, PANews

After DeFi protocols such as Sky, Uniswap, Ether.Fi, Synthetix and Ethena successively adopted or proposed token repurchase strategies, decentralized lending leader Aave is about to join the DeFi dividend army.

On March 4, the Aave community proposed a new heavyweight proposal, planning to update its token economic model, including launching AAVE repurchase, redistribution of protocol excess revenue, terminating LEND token migration, and upgrading secondary liquidity management. Boosted by this, CoinGecko data showed that AAVE's gains reached 21.3% in the past 24 hours.

Aave plans to start dividend mode, and proposals **are still in the

stage of soliciting opinions**

In the battle for DeFi liquidity, Aave has firmly ranked first in the DeFi lending field with its abundant cash flow and innovative capabilities.

Aave's new Aavenomics (Aave Economics) proposal also disclosed that Aave's market share and revenue have been rising steadily in the past two years, including the supply of GHO stablecoins exceeding US$200 million, and Aave DAO's cash reserves have reached US$115 million. This growth is driven by Aave's near-monopoly revenue dominance in the lending agreement space and its continued investment in innovation, such as the recent upgrade to Aave 3.3 and the upcoming Umbrella self-protection system. More noteworthy is that Aave expects its revenue to grow significantly in 2025 due to SVR (Volatility Protection Mechanism) (may exceed US$10 million per year), which can provide financial support for the implementation of Aavenomics.

As investors are increasingly paying attention to the value capture capabilities of the DeFi protocol, many DeFi projects have begun to turn to dividend or repurchase models to improve the ability to give back their token value. Aave's repurchase proposal demonstrates multiple advantages, including strong cash reserve support, diversified revenue structure, high-quality asset rewards, and efficient governance and execution efficiency.

The proposal proposes the following key measures:

· Token repurchase and distribution: Aave plans to launch the Buy and Distribute program, using the agreement’s excess revenue to repurchase AAVE tokens in the secondary market or through market maker partners and allocate them to ecosystem reserves. The initial plan is to be implemented at a scale of $1 million per week for 6 months, or $24 million for repurchases, and will be adjusted according to the overall budget of the agreement. This mechanism aims to reduce circulation supply and increase the value of tokens, while providing a sustainable source for DAO's AAVE budget.

· Umbrella and AFC establishment: The proposal points out that Umbrella is a protection mechanism and growth tool for Aave users, and it is recommended to redistribute some of the Aave DAO excess revenue to Umbrella aToken stakeholders. To implement this plan, the proposal proposes the establishment of the Aave Finance Committee (AFC), which consists of Chaos Labs, Tokenlogic, Llamarisk and ACI, setting a 3/4 signature threshold. AFC will be responsible for managing collector contract assets, defining Umbrella liquidity targets, and performing budget allocations through Tokenlogic's monthly financial management AIP.

· Protocol Revenue Redistribution: The proposal proposes to create ERC20 tokens to Anti-GHO enhance rewards to Aave ecosystem stakers, which are generated by AAVE and StkBPT stakers. The initial generation of Anti-GHO is set to 50% of GHO revenue, of which 80% is allocated to StkAAVE holders and 20% is allocated to StkBPT holders. According to the current GHO lending rate and supply, Aave's annual agreement revenue distributed to GHO stakers is US$12 million.

· LEND migration end: After nearly five years of LEND-to-AAVE migration contract, Aave will close this channel and recycle the remaining 320,000 AAVEs (approximately $65 million) and inject them into ecosystem reserves to provide more funding for growth and security.

· Secondary liquidity management optimization: Aave DAO currently allocates approximately US$27 million (calculated at current AAVE valuation) from ecosystem reserves each year for secondary liquidity incentives. The proposal proposes a hybrid model, combined with StkBPT staking and direct management of the Aave Liquidity Committee (ALC), to achieve greater liquidity at lower costs.

However, the proposal is still in the stage of soliciting opinions, and if a consensus is reached, the proposal will be upgraded to the Snapshot stage. If approved, Aave will authorize the establishment of AFC and implement it step by step through AIP.

DeFi may welcome favorable policies, and the White House supports

the revocation of the "DeFi broker rules"

As the Aave proposal is released, the DeFi industry may usher in a window of breathing and growth due to favorable policies.

According to the Executive Policy Statement issued by the White House Office of Management and Budget (OMB), the U.S. government supports SJ Res. 3, which was initiated by Senator Ted Cruz and others, aims to veto the IRS’ rules on “total income reporting for digital asset sales brokers.”

It is understood that the rule was originally proposed by the Biden administration at the end of 2024, expanding the broker definition to cover software related to the DeFi protocol, and requiring some DeFi users to report the total income of encrypted transactions and taxpayer information. The White House believes that this provision is improperly increasing the compliance burden of US DeFi companies, hindering innovation and causing privacy issues. The statement made it clear that if SJ Res. 3 is submitted to the president, senior White House advisers will recommend that the president sign the bill so that it can become law to repeal the relevant provisions of the IRS.

In response, U.S. Senator Lummis commented, “The IRS’s regulations on DeFi fundamentally misunderstand how decentralized technology works. I have witnessed first-hand how regulatory clarity — rather than over-regulation — can promote innovation. These tough federal regulations may push American crypto entrepreneurs overseas, when we should be fostering this industry at home. It’s an honor to join Senator Ted Cruz to revoke this attack on the crypto community.”

The White House’s support signal may mean a major change in the direction of encryption policy. For the DeFi industry, if the rules are abolished, DeFi projects including Aave will be exempt from cumbersome reporting obligations and reduce operational compliance costs, retain the decentralized characteristics, and may bring about the return of funds and talents, further stimulating the wave of DeFi innovation in the United States.

As the DeFi industry may usher in a more relaxed development environment, Aave's innovation in token economics can not only strengthen its competitive advantage in the liquidity situation, but also accelerate the transformation of DeFi to a sustainable value capture model. Real income is not only a financial indicator, but also the cornerstone of building a sustainable ecosystem.