Aave Price Soars 11% Amid Fee Switch And Token Buyback Proposals

$AAVE price soared nearly 11% intraday and was exchanging hands close to $101 at the time of writing. The recent surge in the altcoin seemed to be linked with a new governance proposal that could initialize a fee switch and a token buyback program.

Furthermore, the recovery in the broader market due to the Bitcoin 2024 conference helped $AAVE to some extent, leading to a double digit rise intraday. As per the analysts, following the proposals, the market activity as well as user engagement surged significantly.

New Tokenomic Proposal Indicates Optimism in $AAVE

The recent surge in $AAVE can be largely attributed to the buzz surrounding the $AAVE fee switch proposal. This proposal will enable the protocol to collect fees on transactions and use them for the buyback of $AAVE tokens.

Furthermore, Mark Zeller, who is the founder of the Aave-Chan Initiative, illustrated that this proposal could significantly change how the Aave protocol earns revenue. The plan includes introducing a mechanism to collect transaction fees and use those funds to repurchase $AAVE tokens from the open market.

Hence if the proposal is approved, it could add nearly $60 Million in annual revenue for $AAVE holders. Aave, a leading DeFi lending platform, currently has over $12 Billion in total value locked (TVL).

User Engagement on the Rise

Moreover, following the proposals, analysts observed a notable change in an important on-chain metrics – active addresses. The active addresses reveal the unique number of users participating in a transaction within the given timeframe.

It highlights the user engagement in the crypto. As per the data obtained from an on-chain analytics website app.santiment.net, a sharp growth was observed in the 24 hour as well as 7 day active addresses. The rise in the number of active addresses corresponds to increased user engagement and heightened demand.

Expectations for Next Month

Aave gained traction after retracting a trendline resistance and has jumped higher. The altcoin outperformed the Bitcoin, Ethereum and Solana following a similar pattern. The recent breakout marks an end to a correction phase which $AAVE was facing since mid March.

Earlier, $AAVE suffered a strong rejection in March 2024 and slumped nearly 40% towards the $80 level. The price suffered multiple rejections near an upper trend line resistance and dropped.

However, the recent breakout pulled the crypto out of a correction phase to add on some gains. On the higher side, the most recent supply lies close to $110, which once surpassed, may pave the way for a 30% rise towards the $130 level.

The technical indicators are giving positive signs. $AAVE is above all the key EMAs, suggesting that a positive trend prevails. The RSI (Relative strength index), as well as 14 day SMA line have surpassed the mean line, indicating a bullish continuation.