AAVE: Will the $50mln buyback plan repeat the 50% price surge?

**Key Takeaways**

– Why has Aave made token buyback official?
The team stated that the trial initiative was a “strong success” in improving AAVE value accrual.

– Will it lift the token above $200 again?
Yes, under a positive broader market sentiment, the deflation plan could boost AAVE in the long run.

—

DeFi lending giant Aave (AAVE) has unanimously approved the creation of a $50 million per year buyback program. This move follows what the project described as a “strong success” after a pilot test initiated in May, aimed at improving the tokenomics of the AAVE token.

According to the plan, the team intends to purchase between $250,000 and $1.75 million worth of AAVE tokens weekly, based on protocol revenue and other factors. There are still two additional steps before the proposal can be fully enforced.

—

### AAVE Buybacks and Potential Impact

Since May, the buyback initiative has acquired over 94,000 AAVE tokens, spending more than $22 million in the process. May marked the largest monthly purchase during the trial program, with the team adding 20,100 AAVE tokens.

During the same period, AAVE posted price gains of over 50%, partly fueled by a broader market recovery in Q2. From July to October, the team averaged about 10,000 AAVE tokens purchased monthly.

This deflationary move, combined with the broader market recovery, pushed AAVE prices up to $385 by August. However, headwinds in Q4 dragged the token’s value below $200 despite the ongoing buyback program.

—

### ETH Correlation Drives AAVE Swings

AAVE’s value demonstrates a strong positive correlation with Ethereum (ETH). During ETH rallies, AAVE tends to pump even harder. Conversely, during ETH pullbacks, AAVE experiences steeper declines.

As ETH serves as a bellwether for the broader DeFi ecosystem, its momentum often influences sector outliers like AAVE. A rebound in ETH could potentially lift AAVE if this correlation continues to hold.

That said, AAVE has faced selling pressure since the October flash crash, which has weighed on price performance recently.

—

### Exchange Inflows Add More Pressure

Data from CryptoQuant shows that exchange netflow for AAVE surged to a seven-month high last month, with approximately 10,000 AAVE tokens sent to exchanges weekly for sell-off.

Unless this selling pressure from exchanges tapers off, AAVE’s price may remain subdued in the short term.

—

### Conclusion

Overall, AAVE has experienced selling pressure alongside the wider market. However, the scaling of its deflationary buyback program could enhance its value over the long term, especially if positive market sentiment and ETH momentum return.

Stay tuned for further developments as the buyback program progresses and market conditions evolve.
https://bitcoinethereumnews.com/tech/aave-will-the-50mln-buyback-plan-repeat-the-50-price-surge/