Aave considers payment distribution in the DeFi movement

A proposal may be in the works at decentralized lending platform Aave (AAVE), which is being consulted to enable a ‘payment switch' to distribute payments to holders. This was shared by Marc Zeller, founder of the Eve Chan Initiative, on the X social platform.

“Temp check to activate the ‘payment switch' next week,” Zeller said, adding that Ave Decentralized Autonomous Organization (DAO)'s current net profit is about $60 million a year, reflecting five years of operating expenses.

Aave is a crypto lending platform powered by multiple blockchain networks. It allows borrowers to take out a loan in one cryptocurrency while putting another as collateral. It is managed by Aave token holders who jointly established AaveDAO.

In an earlier post on the X social platform, Zeller hinted at the possibility of implementing payments for Aave stakers. On March 16, he wrote, “Security module suggests distribution of new frequency payments to stakeholders.”

“Payment Switch” typically refers to a feature or mechanism within a system or platform to enable or disable specific payments or payments. In decentralized finance (DeFi) protocols such as Aave, a payment gateway allows payments collected from transactions or other activities to be distributed to stakeholders or participants in the protocol.

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The payment switch management allows you to control and adjust payment related policies based on platform needs and objectives. Aave DAO recently greenlit changes to Storicoin GHO to keep the token peg. If Aave DAO goes ahead with payment activation, it will likely be mimicking Frax Finance, which recently proposed to re-introduce the payment switch.

However, on April 5, AaveDAO discussed Dai (DAI) guarantee limits. Chaos Labs risk management consultants have proposed a new proposal that encourages Dai's loan-to-value ratio (LTV) to drop by 12 percent, compared to Mark Zeller's 75 percent reduction.

Earlier, Ave launched a new proposal to set DAI's loan-to-value ratio (LTV) to 0% for all Ave deployments. Additionally, the proposal recommends removing sDAI incentives from the Merit Program from Merit Round 2 and beyond. The move will boost the DAI credit line to 600M DAI in one month, counting on MakerDAO's rapid D3M plan.

Meanwhile, decentralized exchange Uniswap UNI is in the final stages of developing its own payment exchange proposal, which is expected to come out in mid-April following a successful temperature test.

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