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.
