Aave Token Burn Could Finally Delete the AAVE the DAO Keeps Buying

Aave founder Stani Kulechov said on September 29 that burning AAVE is now on the table for Aavenomics 3.0, the overhaul of the lending protocol’s token economics that went live in June. The comment matters because Aave has already bought back more than 1% of AAVE’s supply since April 2025, yet every repurchased token still sits in the DAO’s treasury, where governance can spend it again.

A one-line reply with no numbers behind it

Kulechov made the remark in a public reply to a discussion about how AAVE captures value, and for now that reply is the whole announcement. No governance proposal specifies how much AAVE would be burned, which share of revenue would pay for it or when it would start. Some early coverage has treated the Aave token burn as approved. It has not reached a vote.

The broader design dates to June 25, when Kulechov described an automated, non-discretionary buyback funded by protocol revenue, and Aave switched it on two days later. A burn would add a second step to a mechanism that is already running.

205,000 AAVE bought back, none of it destroyed

Purchases under the current “Buy & Distribute” model began on April 9, 2025. By February 2026, the DAO had spent roughly $42 million on more than 205,000 AAVE, an average of about $205 per token and around 1.28% of the 16 million supply.

Those tokens went to the Aave Ecosystem Reserve, which pays for staking incentives, grants and service providers. They left the market, but a future vote could return them to circulation.

Why a burn weighs more on a 16 million token supply

A burn sends tokens to an address nobody controls, and it cannot be reversed. AAVE’s small capped supply makes the effect easy to measure. As an illustration only, burning 100,000 AAVE a year would remove about 0.625% of supply annually, and 200,000 would remove 1.25%. The existing program bought more than 205,000 AAVE in its first ten months, so Aave has already generated revenue on that scale.

The automated design changed who decides. Under the old program, buyback size depended on budgets and DAO votes, which is how purchases were cut in March and halted in April. Since June 27, an immutable onchain mechanism has routed Aave Protocol and GHO revenue into AAVE purchases on a set cycle, and it keeps running unless governance votes to stop it. The tokens still land in the DAO treasury, which leaves one open question: what happens to them afterwards.

The money is being lined up. Under the Aave Will Win framework, 100% of revenue from Aave-branded products, including all V4 protocol revenue, goes to the DAO, and Kulechov has put annualized revenue flowing to it at about $134 million. Aave’s financial dashboard shows $80.48 million in 2026 revenue so far and $25.33 million in net income, following $152.47 million in revenue for 2025.

Buybacks stopped for ten weeks after the rsETH exploit

This year tested the program hard. In March, TokenLogic proposed cutting the annual budget from about $50 million to $30 million after borrowing-fee revenue fell roughly 25% from its peak, which would reduce purchases from around 487 AAVE a day to 292.

On April 18, an attacker exploited the Kelp LayerZero rsETH bridge and used unbacked rsETH as collateral on Aave to borrow roughly $191 million in WETH. Aave’s own contracts were not breached. The DAO still paused buybacks from April 19 to preserve treasury flexibility, with no restart date at the time. Purchases resumed only when Aavenomics 3.0 went live on June 27, now running at about 292 AAVE a day under the reduced budget.

AAVE rose between 11% and 16% on September 29 into the $166-$170 range, during a broader DeFi rebound and four days after Coinbase’s tokenized stocks went live on Aave V4 on Base. At those prices, the 205,000 repurchased tokens are worth about $34 million, below their $42 million cost.

Uniswap and Hyperliquid already run the model Aave is weighing

The Financial Times reported that crypto projects spent about $638 million on token buybacks between January and August, above the roughly $545 million spent over the same stretch of 2025. Uniswap has been burning UNI with protocol fees since December 2025, while Hyperliquid’s Assistance Fund channels 99% of fees into HYPE and had removed about 46.7 million tokens by August 23. The FT also noted that results have been uneven, with some tokens sliding despite heavy repurchases.

The 525,000 AAVE any proposal will have to address

An Aavenomics 3.0 proposal will need to say whether it burns everything it buys, a fixed share, or only purchases made after revenue clears a threshold. With revenue below its 2025 peak, a threshold design could leave burns idle in weaker quarters. It would also need to settle how much of the daily flow the treasury keeps, since the DAO leaned on that cash cushion after the rsETH incident, and every dollar spent on AAVE is a dollar unavailable for reserves or risk coverage.

The existing stockpile is the larger question. Besides the 205,000 repurchased tokens, about 320,000 AAVE are tied to the old LEND-to-AAVE migration contract, and the proposal to move them into the reserve already listed burning as a possible use. Together that comes to roughly 3.3% of supply, more than a full year of purchases even at the original $50 million budget.

The next concrete signal will come from Aave’s governance forum. A change of this size normally moves through a temperature check and an ARFC with a Snapshot vote before an onchain AIP executes it, a process that usually takes several weeks, so the size of any burn will be public well before a single token is destroyed.