---

title: [ARFC] Buyback Program - Budget Adjustment
author: @TokenLogic
created: 2026-03-04

---

Summary

This publication proposes reducing the annual AAVE buyback budget from approximately $50M to $30M ad outlined in the Aave DAO Funding Insights forum post.

Motivation

As outlined in the Aave DAO Funding Insights publication, the DAO's borrow fee revenue has declined approximately 25% from its peak, with January 2026 revenue of $7.95M, down from $13.5M in January 2025. At the same time, the optimistic 2026 operational budget is estimated at $190M, resulting in a structural deficit relative to 2025's annual revenue of $142M. Recalibrating the buyback program is a necessary step to ensure operational sustainability.

Since its inception in April 2025, the buyback program has successfully acquired over 205,000 AAVE (1.28% of total supply), demonstrating the protocol's strong net acquisition posture. At a reduced $30M annual budget, the DAO would still acquire an estimated 292 AAVE per day, sustaining meaningful accumulation while preserving stablecoin reserves for operations and growth initiatives.

The transition to include volatile assets, such as ETH, in stablecoin-funded buybacks is supported by the DAO's treasury composition. Across all of the wallets, the treasury holds approximately $40M in ETH-correlated assets. Given the strong historical relative correlation between AAVE and ETH, swapping between these assets is a relative-value trade with significantly lower volatility risk than converting from USD-denominated assets. This approach preserves the DAO's stablecoin reserve, critical for funding service providers, growth programs, and operational runway, while utilising assets that are naturally aligned with AAVE's price movements.

The MainnetSwapSteward already supports ETH-to-AAVE swap routes, enabling this transition without additional infrastructure.

Specification

Parameter	Current	Proposed	Delta
Annual Budget	~$50M	~$30M	-$20M
Primary Funding Source	Stablecoins	ETH / Volatile Assets	—
Est. Daily Acquisition	~487 AAVE/day	~292 AAVE/day	-195
Est. Annual Acquisition	~177,855 AAVE	~106,580 AAVE	-71,275

The MainnetSwapSteward will be configured to prioritise ETH and ETH-correlated assets (wETH, wstETH) as the primary input for AAVE acquisitions. Stablecoin-funded buybacks will continue on a secondary basis as needed to meet the target budget, but the majority of acquisition volume will shift to volatile assets.

The reduced budget maintains the DAO's position as a net acquirer of AAVE while freeing approximately $20M annually in stablecoin reserves for operational needs.

Forward Looking Statement

TokenLogic will continue to monitor buyback execution, AAVE acquisition rates, and treasury composition following this adjustment. As the Aave DAO’s revenue and growth spending commitments are met, the buyback program will be revised to direct capital to the areas that generate the highest returns for token holders.

This proposal is part of the broader set of recommendations outlined in the Aave DAO Funding Insights publication, which also covers Safety Module emission reductions, GHO liquidity strategy, and treasury management priorities for 2026.

Disclosure

TokenLogic is an active service provider to the Aave DAO, the beneficiary of stream 100072 and the KPI as outlined in this publication. The scope of this engagement is available via this forum proposal.

TokenLogic supports and maintains an independent delegate voting platform within the Aave community.

TokenLogic and associated entities have no undisclosed material conflicts of interest at the time of submission.

Next Steps

1. Gather feedback from the community.

2. If consensus is reached on this ARFC, escalate this proposal to the Snapshot stage.

3. If the snapshot outcome is YAE, escalate this proposal to the AIP stage.

Copyright

Copyright and related rights waived via CC0.