In recent years, the rapid development of the decentralized finance (DeFi) field has attracted the attention of many investors. Among them, AAVE, as one of the leading lending protocols, has also attracted much attention on the economic structure of its token AAVE. In order to further enhance the utility of AAVE, the Aave Chan Initiative recently proposed a reform proposal that aims to promote the accumulation of the value of the token and eliminate the potential risk of slashing by introducing a revenue sharing mechanism.
The current state of AAVE tokenomics
Currently, AAVE’s token economics face some challenges, particularly with regard to the operation of the security module. In the current security module, pledgers of AAVE (stkAAVE, total locked amount $228 million) and AAVE/ETH Balancer LP tokens (stkABPT, total locked amount $99 million) are at risk of having their tokens slashed. This risk mainly stems from the fact that in the event of a shortage, AAVE tokens may be slashed to make up for the lack of funds.
Shortcomings of the security module: When faced with bad debt, stakers of stkAAVE and stkABPT found that these tokens lacked correlation with the collateral assets and therefore were not ideal collateral assets. In the event of a shortage, market selling pressure on AAVE will further reduce the token’s coverage, which is a potential risk for both holders and platform users.
New Umbrella Security Module
In order to deal with the above problems, the Aave Chan Initiative proposed a new Umbrella Safety Module. Under this new mechanism, stkAAVE and stkABPT will be replaced by stk aTokens starting with aUSDC and awETH. Through this alternative, users can stake their assets more securely.
Advantages of the staking mechanism: Providers of aUSDC and awETH can choose to stake their assets to earn additional income on top of the interest paid by borrowers, which can be released in the form of AAVE, GHO or protocol income. This mechanism not only improves the liquidity of the asset, but also enhances user demand for AAVE tokens.
Introduction of revenue sharing mechanism
In addition to security module improvements, the Aave Chan Initiative also plans to further drive demand for AAVE by introducing a revenue sharing mechanism. This means that users who hold AAVE tokens will be able to share in the revenue generated by the protocol, thus increasing the attractiveness of the token.
Potential impact of revenue sharing: The implementation of the revenue sharing mechanism will make the AAVE token not only a governance token, but also an asset with real economic value. By holding AAVE tokens, users can gain direct economic benefits in the success of the protocol, which will attract more users to participate in the AAVE ecosystem.
future outlook
As AAVE token economics continue to improve, this proposal from the Aave Chan Initiative will undoubtedly have a profound impact on the future development of AAVE. By eliminating haircut risk and introducing a revenue sharing mechanism, AAVE will be able to better serve its users while increasing the market value of the token.
Enhance user confidence: The new security module and revenue sharing mechanism will enhance user confidence in AAVE, making more investors willing to participate in the AAVE ecosystem. As the user base expands, AAVE's liquidity and market recognition will also increase.
Conclusion
Overall, the reform plan proposed by the Aave Chan Initiative is not only a major improvement to the economics of AAVE tokens, but also an active exploration of the entire DeFi ecosystem. By introducing new security mechanisms and revenue sharing mechanisms, AAVE will occupy a more important position in the future market. With the gradual implementation of this proposal, AAVE's community and ecology will usher in new development opportunities, and users will also benefit a lot from it.
In this rapidly evolving field, it is crucial to remain innovative and adaptable. The efforts of the Aave Chan Initiative will undoubtedly pave the way for the future of AAVE and promote its further development in the DeFi field.