Aave

DeFi

A proposal may be in the works at the decentralized lending platform Aave&nbsp;as deliberations about the activation of a “fee switch” to distribute fees to holders is set to get underway, <a href="https://twitter.com/lemiscate/status/1776638305540476992" target="_blank" rel="noopener nofollow">according</a> to Aave Chan Initiative founder Marc Zeller.
Zeller said, “Temp check to activate ‘fee switch’ next week,” after noting that Aave DAO — the community-driven decentralized autonomous organization (DAO) behind the Aave platform — current net profits total about $60 million per year.
Aave is a crypto lending platform primarily based on Ethereum. It allows borrowers to take out loans in one cryptocurrency and depositing another as collateral. It is governed by holders of the Aave (<a href="https://cointelegraph.com/aave-price-index" target="_blank" rel="noopener nofollow">AAVE</a>) token, who collectively form the Aave DAO.
In a prior post on X, Zeller <a href="https://x.com/lemiscate/status/1768934851338469608" target="_blank" rel="noopener nofollow">hinted</a> at the possibility of implementing fees for Aave stakers. On March 16, he wrote, “A new iteration of the safety module will suggest distributing fees to stakers.”
A “fee switch” typically refers to a feature or mechanism within a system or platform that allows for activating or deactivating specific fees or charges. In decentralized finance (DeFi) protocols like Aave, a fee switch might enable the distribution of fees collected from transactions or other activities to tokenholders or participants. 
Related: <a href="https://cointelegraph.com/news/ethereum-restaking-has-hidden-risks-coinbase-report">Restaking could introduce ‘hidden risks’ to Ethereum — Coinbase</a>
The fee switch will allow governance to control and adjust fee-related policies based on the platform’s needs and objectives. Aave DAO recently greenlit alterations to staking fees for&nbsp;<a href="https://cointelegraph.com/news/aave-protocol-launch-stablecoin-gho-ethereum-mainnet">its stablecoin GHO</a> to maintain the token’s peg. If Aave DAO proceeds with fee activation, it will emulate Frax Finance, which recently <a href="https://snapshot.org/#/frax.eth/proposal/0x9ec68015d6f6fd185f600a255e494f4ff926bbdd9b268f4bd712983a6e68fb5a" target="_blank" rel="noopener nofollow">endorsed</a> a proposal to reintroduce its fee switch.
However, on April 5, the AaveDAO <a href="https://cointelegraph.com/news/aavedao-debates-dai-collateral-limit-after-600-million-mint-e-usd-backing">discussed Dai (DAI) collateral restrictions</a>. Risk management advisers from Chaos Labs presented a fresh proposal advocating a 12% decrease in Dai loan-to-value ratios (LTV) against Marc Zeller’s proposed 75% reduction.
Prior to this, Aave <a href="https://cointelegraph.com/news/aave-counters-maker-dao-expansion-dai-risk-adjustment">launched a&nbsp;new proposal</a> to set DAI’s loan-to-value ratio to 0% across all Ave deployments. Additionally, the proposal recommends removing sDAI incentives from the Merit program starting from Merit Round 2 and onward. The move counters MakerDAO’s rapid D3M plan, raising the DAI credit line to about 600 million DAI a month.
Meanwhile, decentralized exchange Uniswap&nbsp;is in the final stages of <a href="https://gov.uniswap.org/t/temperature-check-activate-uniswap-protocol-governance/22936/70" target="_blank" rel="noopener nofollow">preparation</a> for its own fee switch proposal, expected to come in mid-April following a successful temperature check. 
Magazine: <a href="https://cointelegraph.com/magazine/crypto-inevitable-all-in-meet-vance-spencer/">‘Crypto is inevitable’ so we went ‘all in’ — Meet Vance Spencer, permabull</a>

Aave contemplates fee distribution in DeFi shake-up

Cointelegraph

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