$AAVE is a very powerful financial giant. The founding team is simply a genius and has been praised by me and Vitalik. As someone who only plays spot trading, I studied it for a long time and finally figured it out. I only regret that I didn't discover this gem earlier. Let me tell you what the Aave model is in a simple and clear way!
Aave buyback plan, the operating mechanism is as follows:
Income generation: Aave V3 lending generates income, which goes to the Aave Collector. Income distribution: Part of the income is used to purchase AAVE tokens and allocated to the ecosystem reserve. Another part of the income is distributed to StkAtokens holders in the form of Atokens. Security guarantee: In the event of a funding shortage, the staked StkAAVE and StkGHO tokens will be seized and destroyed to repay the debt. Anti-GHO provides additional security, generates StkGHO for stakers, and destroys the staker's debt when necessary. Reward issuance: Stakers (such as StkAAVE and StkGHO holders) will receive rewards based on their contributions, which come from the income generated by the protocol. Whenever a loan occurs, the protocol will automatically purchase Aave in the secondary market, which will undoubtedly inject a shot of confidence into the long-term development of the Aave coin price.
Breach of contract: The two parties agree on the loan amount and repayment date. The borrower needs to provide collateral such as eth. If the borrower does not repay on the specified date, the Aave team will automatically convert part of the eth into aave and official stablecoins in the secondary market.
Liquidation: If the market price of collateral such as eth is lower than a certain proportion of the original benchmark, it will be liquidated and part of the income will go into the DAO development fund.
Genius, the team makes money no matter what. There is a reason why Aave is so strong.
