AAVE governance implementation
The Aave governance process is multi-step. First, a proposal is created in the Governance Forum. After sufficient discussion, it is submitted to a non-binding general vote on the Aave Snapshot.
This vote is called a Temp Check vote and serves to gauge community sentiment. Then, the proposal moves to the RFC (Request for Final Comments) stage, where it undergoes formal scrutiny and another non-binding Snapshot vote. After that, the proposal becomes a fully-fledged AIP and is submitted on-chain via the governance contracts:
- payloads submitted to the following contract
- proposals submitted to following contract
Votes are then submitted by voters via the VotingMachine contract. Upon validation by the Governance contract, the vote results become binding and executable via the PayloadsController.
The legacy Safety Module implementation
The legacy safety module for AAVE is represented by the stkAAVE contract. Users may deposit AAVE there and withdraw after declaring a cooldown period. Once the cooldown period elapses, withdrawals are possible within a two-day window and are not possible thereafter.
Rewards are sourced from the Aave Ecosystem Reserve at a daily rate of total allocation specified by the DAO. Currently, the allocation is 315 AAVE per day, which projects to a 3.94% APY.
In case of a bad debt emergence, slashing is done via the Lvl1 Aave Executor by invoking the slash method of stkAAVE.
AAVE buybacks implementation
In April 2025, a proposal had passed and had been executed; a quantity of aEthUSDT is approved by the Ecosystem Reserve, and thereafter the Aave Finance Committee uses the approved funds to perform AAVE purchases on secondary markets or via market makers.
The repurchased AAVE may then be burned subject to a governance decision.