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In this article, we look at the latest relevant news about the Aave project, a decentralized lending crypto protocol with 37 billion in TVL.
Among the hottest topics, we find the introduction of a new fee change policy and the presentation of a particularly risky governance proposal.
Finally, let’s take a look at the graphical structure of the AAVE token and see what the possible price scenarios are for 2025.
All the details below.
The founder of Aave considers the “fee switch” to improve the management of their crypto
A few days ago, Stani Kulechov, founder of the well-known crypto project Aave, expressed his intention to activate a “fee switch” initiative for the protocol. We are talking about a mechanism that aims to improve the revenue efficiency of the platform by investing part of the collected fees.
Generally, these proposals end up rewarding the holders of the platform’s native token, in this case AAVE, given the way the capital is distributed.
It is estimated that, if the fee switch is truly integrated, part of the revenue will be offered as a “dividend” to the holders/stakers of the crypto or will be used for buyback in the market.
The Aave protocol is in a solid financial position, and it can afford to allocate a portion of the new revenue to more aggressive investment strategies.
Its treasury holds almost 100 million dollars in non-native assets, including stablecoin, Ethereum and other cryptocurrencies.
Considering also the AAVE crypto itself, the treasury well exceeds 328 million dollars, according to what is reported by TokenLogic.
Regarding the proposal to change the fees, Marc Zeller, founder of Aave Chan, who was one of the first contributors to the plan, intervened.
The expert highlighted how Aave’s net revenues significantly exceed operating expenses, making the move not only feasible but also speculatively strategic.
These are his words in a post on X
“When the protocol’s treasury is presented in this way and the net revenues of the DAO are more than double the Opex (incentives included), the Fee Switch is not an if; it is a when”.
Composition of the Aave Treasury. Source: TokenLogic
The new governance proposal to unite the price feed of USDe and USDT
Another very important situation for Aave concerns the new governance proposal put forward by Chaos Labs and LlamaRisk on January 3rd.
The two members of the Aave DAO have suggested aligning the price of USDe (stablecoin of the Ethena protocol) with that of USDT in their own price feeds.
This means that the oracle in charge, namely Chainlink, should encode the price of USDe as if it were the stablecoin of Tether, limiting the risks of market fluctuations.
We remember in fact that the first currency has a direct exposure to derivatives and digital assets like Ethereum and Bitcoin while it is not backed by fiat reserves.
In this case, the risk of depeg is much higher compared to coins like USDT or USDC, which have collateral that can cover deposits at 100%.
The objective of the proposal is precisely to ensure that users do not suffer from possible temporary depegs of USDe, boasting price stability.
In this way, those who use the crypto protocol reduce the risk of being liquidated in case of high volatility.
The proposal reads as follows:
“By linking the value of USDe directly to USDt, we align the sUSDe oracle with USDt prices, ensuring a smooth integration and avoiding disruptions caused by temporary price fluctuations in USDe.”
In any case, the Aave community does not seem to have taken the news well, offering a very negative feedback to the governance proposal.
According to what is written in the DAO forum, many users have complained about the risks associated with this initiative, which seems to be of giant caliber for Aave.
In essence, reference is made to the underlying risk factors of USDe by Ethena, which do not appear to have been taken into consideration by Chaos Labs and LlamaRisk.
A user in particular, Hazbobo said that coding USDe with USDT seems a bit risky since the former is not even considered a stablecoin.
Furthermore, the proposal does not evaluate the best case scenario and the worst case scenario, making the whole discussion somewhat reasonably unreliable.
Source: https://governance.aave.com/AAVE crypto price analysis: where are we headed?
The crypto Aave comes from a super positive phase, with a performance of 78% in the month of December that has made it one of the most appealing DeFi coins of the moment.
The token of the lending protocol seems to have taken off right after the USA presidential elections, reaching even the level of 390 dollars.
From here the bulls had to clash with the downward pressure of the bears, which pushed AAVE below 300 dollars in the middle of the chart retracement.
Now the #31st cryptocurrency in the market is priced at 337 dollars, waiting to discover what the direction will be in the first quarter of the year.
Indicatively, the probabilities favor an appreciation of AAVE, which should continue its bull run towards the search for new highs.
The quotations are still distant from the daily EMA50 and market volumes remain quite high, demonstrating the activity of the buyers.
Furthermore, the new fee switch policy, if implemented, will give more value to the crypto AAVE, its use cases, and/or by removing supply from the market.
We expect that in the coming weeks AAVE will break the resistance of 400 dollars, aiming for new price horizons.
For the joy of the shortists, we point out that there could also be possible bear scenarios for the price of the currency.
We indeed notice a large bearish divergence on the RSI between the values of December 13 and those of today: while the index indicates a decline, the prices have moved sideways.
To add then how, in the case that even Bitcoin and Ethereum were to register drawdowns, AAVE would also be involved, ruining the plans of the bull.
In the hypothesis of a price contraction, we can expect an AAVE below the 50-period moving average, between 280 and 240 dollars.
Source: https://it.tradingview.com/chart/1hwwyywT/?symbol=BINANCE%3AAAVEUSDT
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