HIGHLIGHTS Aave founder Stani Kulechov said a token burn is under consideration for Aavenomics 3.0. No governance proposal yet defines the size, funding or timing of any burn. AAVE repurchase
HIGHLIGHTS
Aave founder Stani Kulechov said on September 29 that burning AAVE is now on the table for Aavenomics 3.0, the planned overhaul of the lending protocol’s token economics. 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.
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 said Aave was building an automated, non-discretionary buyback funded by protocol revenue. A burn would sit on top of that as a second step.
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.
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 word “automated” deserves as much attention as the burn. Buyback size today depends on budgets and DAO votes, which is exactly how the program was cut and then halted this year. A contract could instead buy only after operating costs and reserve targets are covered, tying AAVE demand directly to lending fees. Aave has not published that architecture yet.
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.
AAVE supply at stake
Share of the 16 million AAVE supply
Repurchased AAVE plus LEND migration tokens~3.3% Bought back since April 20251.28% Illustrative burn of 200,000 AAVE a year1.25% Illustrative burn of 100,000 AAVE a year0.625%Burn figures are illustrations, not parameters from any Aave proposal.
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, and it set no restart date.
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.
The Financial Times reported that crypto projects spent about $638 million on token buybacks in 2026, above the roughly $545 million spent in 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, according to a filing with the SEC. The FT also noted that results have been uneven, with some tokens sliding despite heavy repurchases.
AaveCONSIDERING205K+
AAVE bought, none burned
Excess protocol revenue, paused since April
UniswapBURNING186K
UNI burned in a record day
Protocol fees on V2 and V3 across 11 chains
HyperliquidBURNING4.7%
of initial HYPE supply removed
99% of protocol fees to the Assistance Fund
JupiterBURNED134M+
JUP burned after a DAO vote
From 250M+ JUP bought back since Feb 2025
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 have to restart purchases the DAO halted to keep cash available, 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.
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