Aave Community Weighs Proposal to Distribute Protocol Revenue Among Token Holders

Aave’s recent proposal is seeking governance feedback on implementing a “fee switch” in anticipation of higher protocol revenue.

Marc Zeller, the founder of Aave-Chan Initiative (ACI), published a proposal to Aave governance on July 25 to create a clear roadmap towards distributing Aave’s protocol revenue among token holders, what in decentralized finance (DeFi) is known as a “fee switch.”

ACI suggests that Aave implements a “Buy & Distribute” program, which uses the revenue surplus to acquire AAVE from liquid markets and compensate staked AAVE (StkAAVE) holders.

In the proposal Zeller says “There’s little to no difference in user experience from the current situation, but in terms of protocol sustainability, it’s a paradigm shift. This new system also introduces a constant demand side for the AAVE asset on secondary markets.”

AAVE’s price jumped 9.4% from $86 to $94 after the proposal was published.

The proposal comes as Aave explores new safety modules that are more cost-efficient. The proposal says the improved economic efficiency will save the protocol more money, and therefore increase the size of the protocol’s revenue. The excess revenue would in theory allow for the protocol to be able to afford the proposed token buybacks.