AAVE, the native governance token of the popular decentralized finance (DeFi) protocol Aave, saw a significant surge of 13% in price on April 9, 2025, following the approval of a crucial buyback proposal by its tokenholders. This move is part of Aave’s ongoing efforts to restructure its tokenomics and boost the value of the AAVE token.

The buyback proposal, which was approved with overwhelming support from more than 99% of tokenholders, allows Aave to purchase $4 million worth of AAVE tokens. This amount is intended to sustain the buyback process for the next month. The proposal is only the beginning of a larger plan, with Aave aiming to repurchase $1 million worth of AAVE tokens each week for the next six months.

AAVE Token Price Surge

The news of the proposal passing triggered a sharp rally in AAVE’s token price, which jumped by over 13%, pushing the token’s market capitalization above $2.1 billion, as per data from CoinGecko. The successful passing of the proposal is seen as a positive sign by the market, with many speculating that it could lead to sustained growth in the coming months.

The buyback is positioned as a “first step” in a broader strategy to revamp Aave’s tokenomics. According to the proposal, the goal is to “sustainably increase AAVE acquisition from the open market and distribute it to the Ecosystem Reserve.” This move aims to benefit tokenholders while ensuring the long-term health and growth of the ecosystem.

The Broader Tokenomics Overhaul

The buyback proposal comes as part of Aave’s ongoing efforts to reform its tokenomics model. In March 2025, the Aave Chan Initiative (ACI), a governance advisory group, suggested a more comprehensive overhaul that includes new revenue allocations for AAVE tokenholders. The proposal also outlines plans to implement enhanced safety features for users and the establishment of an “Aave Finance Committee” to further guide the protocol’s evolution.

Aave’s success as a DeFi protocol is evident, as it remains one of the largest platforms in the decentralized finance space. As of April 9, 2025, Aave’s total value locked (TVL) surpassed $17.5 billion, according to data from DeFiLlama. The protocol has also emerged as one of DeFi’s biggest fee generators, with an annualized fee income estimated to be around $350 million.

The Rise of Buybacks in DeFi

Aave’s buyback proposal is part of a growing trend among DeFi protocols to implement buyback mechanisms for their native tokens. This trend is gaining traction as protocols strive to reward their tokenholders and offer additional incentives. The pressure to provide tokenholders with a share of the protocol’s revenues has intensified, especially in light of favorable regulatory changes for DeFi in the United States under the leadership of President Donald Trump.

Other DeFi projects such as Ethena, Ether.fi, and Maple Finance have also introduced buyback proposals as part of their tokenomics strategies. For example, in January 2025, Maple Finance’s community proposed buying back native SYRUP tokens and distributing them as rewards to stakers. Similarly, Ether.fi has committed to directing 5% of its protocol revenues towards buying back native ETHFI tokens.

The buyback mechanism is viewed as a way to create more value for tokenholders by reducing the circulating supply of tokens, which in turn can drive up their value. This strategy has been increasingly popular as DeFi protocols seek to attract and retain investors by demonstrating a commitment to their communities.

Aave’s Role in DeFi

Aave’s success and prominence in the DeFi space are undeniable. The protocol continues to lead the charge with its innovative lending and borrowing solutions, enabling users to earn interest on their crypto assets or take out loans using digital currencies as collateral. Aave has earned a reputation for being one of the most reliable platforms in the DeFi ecosystem, which has helped it attract a substantial user base and maintain its status as a top DeFi protocol.

As Aave moves forward with its tokenomics overhaul and buyback strategy, it is clear that the protocol is positioning itself for continued growth. With the backing of its community and the potential to offer more value to tokenholders, Aave’s future looks bright.

Conclusion

The approval of Aave’s buyback proposal marks an important step in the protocol’s ongoing efforts to enhance its tokenomics and reward its community. The 13% surge in AAVE’s price following the proposal’s approval highlights the market’s positive reception to these changes. As Aave implements its buyback plan and continues to innovate, it remains one of the leading protocols in the DeFi space.

With growing interest in buyback strategies and the potential for future growth, Aave is likely to remain a key player in the decentralized finance ecosystem, drawing the attention of both investors and users alike.