Aave (AAVE) Token Soars 21% After Proposing Its "Most Important Proposal in History"

The AAVE token has seen a remarkable 21% price surge in just 24 hours following the announcement of what Aave DAO calls its “most important proposal in history.”

The AAVE token price shot up by a staggering 21% in just 24 hours after the Aave DAO announced what it calls its “most important proposal yet.”

This substantial move in the Aave token price is even more remarkable considering the broader crypto market saw a 3.5% increase according to the CoinDesk 20 index. This indicates an overwhelming positivity from the crypto community towards the Aave proposal.

The stellar performance of Aave throughout the past year becomes clear when examining the platform’s financial strength. Since mid-2024 alone, Aave’s cash reserves have more than doubled, showcasing the cryptocurrency lending platform’s increasing popularity and adoption.

According to the latest figures, Aave’s cash reserves have surged by 115% to reach $115 million. Meanwhile, GHO, the Aave-native stablecoin, has seen its total supply grow to $200 million.

Furthermore, Aave has been reporting strong revenue numbers, which has enabled the DAO to share more of its success with AAVE token holders. This positive financial situation sets the stage for the ambitious new proposal.

Announced by Marc “Billy” Zeller, a key figure in the Aave community, the proposal is being described as the “most important” in Aave’s history. Sharing the proposal link on March 4, Zeller invited community members to review it closely and provide feedback.

After half a decade of hard work, with the @ACI, we're proud to present the updated Aavenomics proposal to the Aave DAO. We consider it the most important proposal in our history, feel free to have a read and provide feedback. Just Use Aave. https://t.co/nBhr5Q6hQB

— Marc “Billy” Zeller 👻 🦇🔊 (@lemiscate) March 4, 2025

The proposal, dubbed the Aavenomics update, builds on an initial plan that was approved in August. It outlines several ways to increase value for AAVE token holders and create more benefits for users of the Aave platform.

One of the key components of the proposal is increased profit sharing for users who stake their AAVE tokens. Staking has been a way for token holders to earn passive income while helping secure the network.

The proposal also introduces a new type of token called Anti-GHO, which stands for Anti-Gas Harvester Optimization. This special token, denoted as aGHO, cannot be traded on exchanges. However, it presents two valuable options for users.

Firstly, aGHO can be burned to eliminate GHO debt. Essentially, if a user has an outstanding GHO loan, another community member could choose to burn their aGHO to pay off that loan.

Alternatively, aGHO can be converted into a new token called Staked GHO, or StkGHO. This newly created token would then generate additional revenue for those who hold it.

Funding for the Anti-GHO program would come from half of GHO’s revenue, which currently stands at approximately $6 million per year. This is based on GHO’s annual revenue of around $12 million.

Token Buybacks and User Protection

Perhaps the most headline-grabbing element of the proposal is a $1 million per week buy and distribute program for the AAVE token. This regular buying pressure would be applied to the spot market, and the tokens would be distributed to Aave.vc (Aave's venture capital arm) for investing in new protocols.

The proposal suggests that these buybacks could begin immediately and might even expand after six months, potentially leading to an increase in the weekly buyback amount or the scope of the program.

On the safety front, the DAO has proposed a system called Umbrella, designed to protect users from potential losses during market downturns. According to the proposal, Aave will be the only protocol able to protect users from bad debt up to billions, as competitors have essentially given up on protecting their users.

This focus on user safety could give Aave a competitive edge, especially among institutional investors who are particularly concerned with risk management in decentralized finance. The proposal explicitly mentions that this unique advantage will make Aave even more attractive, especially for institutions concerned with on-chain risks.

The timing of the proposal coincides with growing interest in DeFi platforms that can demonstrate both innovation and financial sustainability. Aave's strong cash position puts it in an ideal place to implement these changes without compromising its financial health.

Community members have the opportunity to provide feedback on the proposal, with discussions already taking place on platforms like Telegram. The DAO plans to present a formal on-chain proposal in the coming weeks, which will allow AAVE token holders to vote on these changes.

Market response to the announcement has been overwhelmingly positive, as evidenced by the 21% price surge. This suggests that investors view the proposal as a strong step