Aave Considers Fee Distribution Plan as AaveDAO Deliberates Changes
Decentralized lending platform Aave is discussing a potential initiative, regarding the activation of a 'fee switch' to distribute fees to holders.
Marc Zeller, the founder of Aave Chan Initiative, hinted at this development on the X social platform, indicating a potential move next week. This comes as AaveDAO reports annual net profits of around $60 million, covering operational costs for five years.
The Aave treasury "Cash" (Eth & Stables) is now at 50m$. (2.5 years of operational costs)
Net DAO profits are currently at $50m/year and growing.
Temp check to activate "fee switch" next week.
You can track the treasury balances with @zapper_fi 👇https://t.co/HNRTcA5jCf
— Marc “Chainsaw” Zeller 👻 🦇🔊 (@lemiscate) April 6, 2024
Aave operates across various blockchain networks, facilitating borrowers to take out loans in one cryptocurrency while using another as collateral. Governance is overseen by Aave token holders, forming AaveDAO.
Zeller previously suggested implementing fees for Aave stakers, proposing to distribute fees to them. The concept of a ‘fee switch’ typically involves enabling or disabling specific fees within a DeFi protocol like Aave, potentially benefiting token holders or participants.
AaveDAO’s recent approval of adjustments to staking fees for its stablecoin GHO echoes the potential activation of a fee switch, following a trend seen in projects like Frax Finance.
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In other discussions, AaveDAO explored Dai (DAI) collateral restrictions, with proposals varying between a 12% and a 75% reduction in Dai loan-to-value ratios. Additionally, Aave proposed setting DAI’s loan-to-value ratio to 0% across all deployments, and removing sDAI incentives from the Merit program.
Meanwhile, decentralized exchange Uniswap is preparing to introduce its own fee switch proposal, expected to debut in mid-April after a successful temperature check.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
