Overview of the Proposed Changes
The new proposal, known as “Aavenomics,” suggests important modifications to the AAVE token’s financial mannequin. One of the important thing modifications is the elimination of the protection module, the place AAVE stakers presently earn inflationary yield by risking their tokens as a backstop in case of market shortfalls, equivalent to unhealthy debt.
Instead of counting on the protection module, the proposal suggests redirecting a portion of the income generated by the Aave lending protocol to these staking stablecoins and some different belongings. This shift is anticipated to cut back danger for AAVE holders by eliminating the potential of emergency token gross sales by the DAO and to extend potential rewards by decreasing AAVE inflation.
The proposal features a “fee-switch” mechanism, which has been a subject of debate throughout the DeFi neighborhood for years. If applied, Aave can be among the many largest protocols to undertake this strategy.
Strong Fundamentals:
- AAVE’s Price Movement: Since the proposal was introduced, AAVE has elevated by 50% in greenback phrases. This rise displays the market’s optimistic view of the proposed modifications and their potential impression on the worth accrual for the AAVE token.
- Platform Growth: The complete belongings equipped to Aave’s Mainnet stay near their all-time excessive, displaying resilience regardless of broader market fluctuations. Additionally, the launch of the Aave Lido market attracted $300 million in capital inside simply three days, indicating robust demand for Aave’s choices.
Aave’s market share within the DeFi lending house has additionally risen to 70%, with $7.4 billion in energetic loans, almost 10 instances greater than its closest rivals.
