Aave DAO Approves $50M Annual Buyback: Is the Deflationary Engine Enough for AAVE to Hit $200?

Reading time : 4 min.
Share: Facebook
Twitter

Aave DAO Approves $50M Annual Buyback: Is the Deflationary Engine...

Robert Petrov
5 November, 2025, 18:49
32

Aave DAO Approves $50M Annual Token Buyback: Can It Push AAVE Back Above $200?

The Aave DAO has greenlighted a $50 million annual token buyback program, marking a significant step in enhancing the protocol’s tokenomics and rewarding long-term holders. This decision follows a highly successful pilot that demonstrated clear benefits for AAVE’s value accrual.

Pilot Program Delivers Strong Results

Launched in May, the trial buyback initiative saw Aave repurchase over 94,000 AAVE tokens using more than $22 million in protocol revenue. The most aggressive month was May, when the team acquired 20,100 AAVE — the largest single-month haul during the test phase.

These strategic purchases coincided with impressive price momentum. AAVE surged over 50% in May, fueled by both the buybacks and a broader crypto market recovery in Q2. By August, the token reached an intraday high of $385, showcasing the potential impact of sustained deflationary pressure.

However, Q4 market headwinds reversed some of those gains. Despite ongoing repurchases averaging 10,000 AAVE per month from July to October, AAVE slipped below $200 amid widespread sector selling.

Weekly Buybacks to Range from $250K to $1.75M

Under the newly approved framework, Aave will conduct weekly purchases ranging from $250,000 to $1.75 million, depending on protocol revenue, treasury health, and market conditions. This flexible approach aims to balance sustainability with meaningful deflation.

Two additional governance steps remain before full implementation, but the unanimous DAO vote signals strong community support for the initiative.

Ethereum Correlation Remains a Key Driver

AAVE’s price action continues to move in lockstep with Ethereum (ETH), often amplifying both rallies and corrections. Historical data shows AAVE outperforming ETH during bull runs but suffering sharper drawdowns when Ethereum falters.

Aave (AAVE) Technical Analysis: $232 Breakout Confirms Double-Bottom Pattern; Next Target $250

As the backbone of decentralized finance, ETH’s performance sets the tone for the entire DeFi ecosystem — including leading protocols like Aave. A sustained ETH rebound could provide the tailwind needed to push AAVE past $200 and beyond, especially with buybacks removing supply from circulation.

Exchange Inflows Signal Short-Term Pressure

Despite the bullish long-term outlook, near-term challenges persist. On-chain data from CryptoQuant reveals exchange netflows hit a seven-month high in October, with approximately 10,000 AAVE sent to trading platforms weekly — a clear sign of profit-taking and liquidation pressure.

This influx of sell orders has kept downward pressure on the price, preventing a clean breakout above key resistance levels. Until exchange inflows ease, AAVE may continue trading in a consolidation range.

Long-Term Deflationary Catalyst

The buyback program represents more than just token accrual — it’s a strategic deflationary mechanism designed to reduce circulating supply over time. With Aave generating consistent revenue from lending fees across multiple chains, the protocol now has a structured way to return value directly to the ecosystem.

Combined with potential network upgrades, expanding total value locked (TVL), and improving risk parameters, the buyback could serve as a powerful price catalyst during the next bull cycle.

What’s Next for AAVE Holders?

While short-term volatility remains tied to broader market sentiment and ETH performance, the annual $50 million commitment positions Aave for long-term appreciation. Investors should monitor:

Weekly buyback volumes as an indicator of protocol health
ETH price trends for directional cues
Exchange inflow trends to gauge selling exhaustion
TVL growth across Aave V3 and specialty markets

In a bullish macro environment, the combination of reduced supply and growing demand could easily propel AAVE toward new all-time highs. For now, patience may be the smartest play — the deflationary engine is officially running.

Robert Petrov publication: "Aave DAO Approves $50M Annual Buyback: Is the Deflationary Engine Enough for AAVE to Hit $200?" was written for 24crypto.news