AaveToken (AAVE) טוקנומיקה

The Aave Protocol's native asset, AAVE, is primarily a governance token with a maximum supply of 16.00 million tokens. The tokenomics structure is designed to decentralize control, incentivize protocol security, and reward ecosystem participation.

Issuance Mechanism

The AAVE token originated from a migration of the protocol's initial token, LEND, which was launched via an Initial Coin Offering (ICO) in September 2018.

• Maximum Supply: The total maximum supply of AAVE is capped at 16.00 million tokens.
• Migration: The transition from LEND (ERC-20) to AAVE (ERC-20) occurred in September 2020. LEND tokenholders were able to exchange their tokens for AAVE at a 100:1 ratio (100 LEND = 1 AAVE). This migration reduced the total number of tokens held by users from 1.3 billion LEND to 13 million AAVE.
• Initial Minting: The total supply of 16.00 million AAVE was allocated as follows:
  • 13.00 million AAVE (81.25% of the maximum supply) were claimable by the original LEND tokenholders.
  • 3.00 million AAVE (18.75% of the maximum supply) were minted directly to the Aave Ecosystem Reserve.
• Inflation/Deflation: Based on available information as of April 15, 2024, there are no token burning or buyback mechanisms currently featured or planned, although a proposal to activate a fee switch and buy back AAVE tokens from the secondary market was under consideration as of July 2024.

Allocation Mechanism

The initial allocation of the 16.00 million AAVE supply was split between LEND tokenholders and the Ecosystem Reserve.

The Aave Ecosystem Reserve is controlled by AAVE tokenholders and stakers via on-chain governance and is used to incentivize liquidity providers, software developers, and integrators.

Usage and Incentive Mechanism

AAVE serves multiple critical functions within the Aave ecosystem, primarily centered on governance and security.

1. Governance

AAVE is the protocol's governance token. Tokenholders can participate in on-chain governance by creating and voting on Aave Improvement Proposals (AIPs), which affect parameters such as asset listings, rewards, permissions, and tuning of the GHO stablecoin.

• Voting Power: Governance power is proportional to a user's balance of ERC-20 AAVE, interest-bearing aAAVE (V3), and staked AAVE (stkAAVE) on Ethereum, plus any delegated tokens.
• Proposal Threshold: At least 1,600 AAVE in Snapshot voting power is required to create a proposal.
• Proposal Types: Proposals are categorized into Short Timelock (2% minimum quorum, 0.5% vote differential) and Long Timelock (20% minimum quorum, 15% vote differential), covering different levels of protocol changes.

2. Protocol Security (Safety Module)

AAVE is used in the Safety Module to protect the protocol against "Shortfall Events" (bad debt).

• Staking: Users can stake ERC-20 AAVE, ABPT (Aave Balancer Pool Liquidity Provider), or GHO tokens in the Safety Module.
• Incentives: Stakers receive Safety Incentives in the form of AAVE tokens from the Aave Ecosystem Reserve. As of April 15, 2024, 820 AAVE are distributed daily pro-rata to Safety Module stakers.
• Risk: In a Shortfall Event, a portion of the staked tokens is slashed (sold) to cover the deficit.

3. Utility and Incentives

• Collateral: AAVE can be used as collateral to borrow other assets on Aave V2 and V3 protocols across various chains (Ethereum, Polygon, Avalanche, Arbitrum, Optimism). Notably, AAVE itself cannot be borrowed on Aave.
• Ecosystem Grants: The Aave Grants DAO, funded by the Ecosystem Reserve, provides AAVE grants to developers and integrators through "Rapid Grants" (under $80,000) and "Community Grants" (over $80,000, requiring a Snapshot vote).
• Liquidity Incentives (Past/Present): While past liquidity mining programs using stkAAVE incentives for supplying/borrowing on Aave V2 ended in May 2022, various incentives for Aave V3 markets on networks like Metis, Optimism, and Polygon have been approved for distribution.

Locking Mechanism and Unlocking Time

The initial LEND token allocation, which was later converted to AAVE, had a vesting schedule.

Initial Vesting (LEND to AAVE)

The original LEND tokens had a two-year vesting schedule with bi-annual unlocks. This vesting schedule applied to the 13 million AAVE claimable by LEND tokenholders.

Unlock Schedule Details

The initial token unlocks for the LEND tokenholders and the Ecosystem Reserve were completed by September 2020. The table below details the major unlock events:

The final unlock event listed occurred on September 24, 2020, when the 3.00 million AAVE for the Ecosystem Reserve were minted, bringing the total cumulative supply to the maximum of 16.00 million AAVE.

Staking Lock-up (Safety Module)

While the initial token allocation is fully unlocked, AAVE staked in the Safety Module is subject to a lock-up mechanism:

• Cooldown Period: A user must activate a 20-day cooldown period before they can unstake and claim their underlying tokens.
• Claim Window: Once the cooldown period ends, users have a two-day window to claim their tokens. If they fail to claim within this window, a new 20-day cooldown period must be initiated. This cooldown period can be changed via Aave Governance.