AAVE: Will the $50mln buyback plan repeat the 50% price surge?
Key Takeaways
Why has Aave made token buyback official?
The crew mentioned that the trial initiative was a “robust success” in bettering AAVE worth accrual.
Will it elevate the token above $200 once more?
Sure, underneath a constructive, broader market sentiment, the deflation plan may increase AAVE in the long term.
DeFi lending large Aave [AAVE], has unanimously authorized the creation of a $50 million per yr buyback program.
The transfer adopted what the mission referred to as a “robust success” after a pilot take a look at initiated in Could, designed to enhance the tokenomics of the AAVE token.
Based on the plan, the crew would eye $250K-$1.75 million in weekly AAVE purchases, based mostly on protocol income and different elements.
Supply: Aave DAO
There are two extra steps earlier than the proposal may be enforced. That being mentioned, AMBCrypto evaluated the pilot take a look at to gauge the potential affect of the newest replace.
AAVE buybacks and potential affect
Since Could, the initiative has bought over 94K AAVE tokens and spent over $22 million within the course of. The crew added 20.1K AAVE in Could, marking the most important month-to-month buy in the course of the trial program.
Supply: Blockworks
Throughout the identical month, AAVE posted worth features of over 50%, partly influenced by the broader restoration in Q2. From July to October, the crew acquired about 10K AAVE on a month-to-month common.
The deflation transfer and broader restoration lifted AAVE to $385 by August. Nevertheless, This fall headwinds dragged AAVE under $200 regardless of the continued buyback.
Past deflation and market sentiment, AAVE’s worth additionally has a robust constructive correlation with Ethereum [ETH].
ETH correlation drives AAVE swings
Supply: Blockworks
The chart confirmed that in ETH rallies, AAVE pumped even tougher. Nevertheless, throughout pullbacks, AAVE additionally dumped tougher.
Because the barometer of the broader DeFi ecosystem, ETH’s momentum additionally trickles all the way down to the sector’s outliers, together with AAVE. Maybe, an ETH rebound may additionally elevate AAVE if the above correlation extends.
That being mentioned, the altcoin has been underneath promoting stress for the reason that October flash crash.
Trade inflows stress worth
Based on CryptoQuant, the Trade Netflow surged to a seven-month excessive, with roughly 10,000 AAVE despatched to platforms for sell-off on a weekly foundation final month.
Supply: CryptoQuant
Except the trade promoting stress tapers, the AAVE worth may stay subdued within the quick time period.
General, AAVE, just like the broader market, was underneath promoting stress. Nevertheless, the potential scaling of its deflation program may increase its worth in the long term.
