AAVE Community Proposes Distribution of Protocol Revenue to Holders

Bittime - Aave Protocol, one of the major players in the decentralized finance (DeFi) ecosystem, recently put forward an important proposal that has the potential to change the revenue dynamics for AAVE token holders. This proposal proposes the implementation of a “fee switch” with the aim of increasing the protocol's revenue and distributing it to token holders.

Income Distribution Proposal

Marc Zeller, founder of the Aave-Chan Initiative (ACI), published a proposal to the Aave community on July 25. This proposal aims to create a clear roadmap towards distributing Aave protocol revenues among its token holders. In the world of DeFi, this concept is known as a “fee switch.”

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ACI proposed that Aave implement a "Buy & Distribute" program, which uses surplus earnings to purchase AAVE from liquid markets and compensate Staked AAVE (StkAAVE) holders. Zeller stated that while there is no significant difference in user experience compared to the current situation, in terms of protocol sustainability, this is a paradigm shift. This new system also introduces constant demand for AAVE assets in the secondary market.

Impact on AAVE Price

Since this proposal was published, the price of AAVE jumped 9.4% from $86 to $94. This shows a positive response from the market towards the potential profits that token holders can obtain through this income distribution.

Economic Efficiency and Protocol Security

This proposal comes at the same time as Aave is exploring new security modules that are more cost efficient. The proposal states that improved economic efficiency will save the protocol more money, thereby increasing the size of the protocol's revenue. This surplus revenue is expected to allow the protocol to buy back tokens as proposed.

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Conclusion

The income distribution proposal put forward by the Aave-Chan Initiative brings new hope for AAVE token holders. With the “Buy & Distribute” program, StkAAVE holders can earn compensation from protocol revenues, which is expected to increase demand for AAVE assets in the secondary market. The positive response from the market, reflected in the rise in AAVE prices, shows that the community sees great potential in this proposal. With new security modules and better economic efficiency, Aave has the potential to cement its position as one of the leading DeFi protocols in the industry.

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