Why the Aave payment distribution plan is a winner for holders

Aave, a decentralized finance (DeFi) lending protocol, is considering enabling a “payment switch” to encourage participation and investment in the ecosystem.

Mark Zeller, founder of the Ave Chan Initiative, revealed this strategic move in a recent discussion on social media platform X.

Aave Contemplates Payment Converter

Zeller said the platform's decentralized autonomous organization (DAO) currently generates about $60 million in net profit per year. This significant figure is “Runway [for] Half a decade” is significantly undermining the platform's $12 million operating expenses. So, Zeller has announced an upcoming temperature probe to activate the ‘charge switch' next week.

A payment switch, essentially, gives a platform the power to turn certain user payments on or off. For Aave, this means redistributing transaction-generated payments to platform participants, specifically Aave holders and stakeholders.

Zeller previously mentioned implementing payments to Aave stakers in March. At the time, he proposed advocating for the revised Safety Module to distribute payments to stakeholders.

According to on-chain data, Aave is the largest lending protocol in the industry, with more than $11 billion worth of digital assets locked up, with Aave's treasury currently commanding $50.3 million across ten addresses. Following news of the proposed fee switch, AAVE's share price rose 4 percent to around $120.

Read More: Aave (AAVE) Price Prediction 2024/2025/2030

While Aave is gearing up for this move, it's worth noting that it's not the first DeFi protocol to adopt a payment converter. Forex Financials recently approved a proposal to re-introduce a payment switch, and decentralized exchange Uniswap is about to finalize its own payment switch proposal.

Read more: 11 best DeFi protocols to watch in 2024

Recently, Aave DAO has been making several proposals regarding its operations. One popular idea currently under investigation focuses on reducing exposure to DAI after MakerDAO announced plans to invest up to $1 billion in the fast-growing USD synthetic dollar stablecoin.