Aave launches buyback program, which may have an impact on price
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Aave has officially launched a token buyback program. The project confirmed that it will buy back $1 million worth of AAVE tokens every week for the next six months. On an annualized basis, the total buyback will exceed $50 million.
According to the update, these repurchased tokens will be redistributed to AAVE stakers and rewarded directly from the protocol revenue.
It is worth mentioning that this buyback program is part of the "fee conversion" program. This mechanism allows Aave to use part of its protocol revenue to buy back its native tokens.
Since the announcement on social media, supporters and advocates of the project have widely spread the view that this is one of the most important updates in Aave's history.
According to the update, the long-term plan is to increase the weekly buyback size. As the protocol revenue grows, its ability to buy back more tokens will also increase. Aave expects that starting in 2025, the protocol revenue will grow through various channels.
One of the main contributors is the recently announced partnership with Chainlink to develop Smart Vault Revenue (SVR). The deal is expected to help Aave generate up to $10 million in revenue from MEV (miner extractable value) during liquidations.
Other growth drivers include GHO and Aave’s stablecoin, which is expected to be profitable and sustainable by next year. The protocol will also launch Horizon, a new product focused on real-world assets (RWA). These moves indicate that the protocol will develop a broader plan to diversify revenue sources and improve returns for token holders.
Coming on the launch, Aave founder Stani Kulechov said the move is part of a broader expansion plan. He cited Aave V4, a partnership with Chainlink, risk assets (RWA) through Horizon, and the growth of GHO as core parts of the project’s 2025 vision.
What this means for the price of AAVE
In the previous update, two whale wallets deposited more than 41,000 AAVE on April 1, which weighed on the price of Bitcoin due to outflows from Bitcoin Cash to centralized exchanges (CEX) within 24 hours.
As of the time of writing, AAVE is trading at $139.18, up 2% in 24 hours. This proves that the update has sparked heated discussions in the community.
It is worth mentioning that Aave is currently buying back its tokens, which increases the stable demand for the native asset. Based on this trend, experts believe that this will help support the price of the token. This is because the number of tokens available on the market will decrease.
Likewise, the repurchased tokens will be distributed to those who stake AAVE. This means that stakers may receive more rewards, which gives people more reason to hold the tokens instead of selling.
In February, Aave liquidated $210 million. It is worth noting that the protocol did this without generating any bad debts. This success shows that DeFi protocols can effectively handle liquidations even during market downturns.
