Aave is reportedly deliberating the activation of a ‘fee switch’ that would allow for the distribution of fees to Aave token holders.
The proposal, shared by Aave Chan Initiative founder, Marc Zeller, suggests that Aave’s current net profits total around $60 million per year, reflecting five years of operational costs.
The activation of the fee switch would empower the Aave decentralized autonomous organization (DAO) to control and adjust fee-related policies based on the platform’s needs and objectives.
This move could mirror the recent actions of Frax Finance, which has already endorsed a proposal to reintroduce its own fee switch. Aave’s potential adoption of a similar mechanism would provide token holders with a share of the platform’s profits, potentially making the Aave token a more attractive investment.
Alongside the potential fee switch, Aave DAO has also been discussing changes to the loan-to-value (LTV) ratios for its Dai (DAI) collateral, with a proposal advocating a 12% decrease in Dai LTV, in contrast to a more significant 75% reduction proposed by Marc Zeller.
The Aave community’s deliberations come as the decentralized exchange Uniswap prepares to unveil its own fee switch proposal, expected to be introduced in mid-April following a successful temperature check.
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