Aave proposes buy-and-distribute program to share profits

Aave DAO has put up a voting proposal to improve the tokenomics and redistribute some of the protocol’s earnings. The vote follows a temp check proposed in 2024, which is shaping up in its final form for a vote. 

Aave is running a proposal to start distributing earnings and shifting the tokenomics. The current proposal follows a temp check, which passed with a Yes vote in 2024. The current vote will bring to realization the proposed new Aavenomics, with the main goal of profit distribution. 

Aave has promised for a long time that it would start some form of burn or redistribution program once its GHO token surpassed a supply of 175M. However, GHO was above that supply for months, but Aave did not change its tokenomics. 

Revenue distribution will happen for both GHO and AAVE holders through a mix of burns or lockups. The new programs will supplement existing staking revenues and will be tied to Aave’s earnings. The Aave distribution program is estimated to distribute up to $1M weekly for the first six months. The buyback budget may also increase under favorable conditions.

Aave has passed the milestones for profit sharing

The Aave community is pushing for redistribution, as the protocol expects 2025 to be successful for DeFi lending. In the six months since the temp check passed, Aave has become a leader among other protocols, and it has supplied passive income to others, especially Sky Protocol.

Aave’s market share has increased every quarter for the past two years. 

The GHO stablecoin successfully expanded its supply above 208.3M tokens, even during times of market turbulence. The protocol continued to gain strong revenues during the first months of 2025, a period that erased the positions of Ethereum (ETH). 

For the past month, Aave still managed $8.8M in revenues, from $11.3B in active loans. Active loans peaked at over $15B in December 2024, but they have deflated gradually since then. Currently, Aave offers lower interest rates due to market conditions, but it remains the leading lending protocol and the second most influential DeFi app.

Aave achieved weekly fees of over $26M for the beginning of February, later falling toward $15M. The protocol still reaches 132K active monthly users and over 182K token holders.

Aave is down from total loan value at over $20B, but retains its core users and is not surpassed by other protocols. The Aave model is present on 14 chains and has been implemented on Solana by other projects like Kamino Finance.

During the past six months, Aave also managed to implement most of the upgrades previously intended before starting a profit sharing program. The protocol successfully upgraded to Version 3.3, one of the preconditions for lending. 

Aave DAO has already tested profit sharing by building up cash-like reserves. The Aavenomics proposal has increased the reserves by 115%, now sitting at $115M. The remaining reserve is what remains after financing additional Aave Labs development. The recent upgrades took 50% of the DAO budget, while the Merit revenue sharing experiment took up 20% of the DAO budget.

Aave prepares for Umbrella protection program

The other big update for Aave is the long-running proposal for the Umbrella program. The program will cover the most strategic tokens, WETH, USDC, USDT, and staked GHO, which are most widely used as collateral. Reward tokens with protection will include WETH, USDT, USDC, and AAVE. 

The Umbrella upgrade will be released partially on selected networks, including Ethereum, Avalanche, Sonic, Base, Arbitrum, and Gnosis.

In 2025, Aave will also close the migration contract from its former brand, Lend. Another 320M AAVE left in the contract will be released in circulation. 

AAVE rallied above $180 after the news of the upcoming profit distribution. The asset peaked at $185.88 before retreating. AAVE still trades near its three-month low, awaiting a new breakout and a hike to its previous peak close to $400.

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