Aave plan could cut some lenders’ share of interest by 60%
TokenLogic’s proposed interest split would hit some stablecoin lenders harder, while a major Plasma revenue component remains conditional. Read the full story on CryptoSlateUnderstand the crypto stories that matter and what to watch next. Get The Catalyst in your inbox
Aave lenders supplying DAI on Polygon could see their share of borrower interest fall from 75% to 30% under a November 12 proposal by TokenLogic. The plan would redirect more interest to Aave’s DAO treasury, with uneven cuts to lender returns across its markets.
The November 12 proposal covers 54 reserves across 12 Aave V3 instances and Ethereum V2. TokenLogic estimates about $4 million in additional annualized DAO revenue using November 9 balances and rates. That total includes roughly $1 million from Plasma USDT0, a change that would enter the formal proposal only once its terms are finalized.
In Aave’s lending system, the mechanism is the reserve factor: the portion of borrower interest allocated to the DAO instead of suppliers. Raising it changes who receives the interest, without directly changing the borrowing-rate curve. TokenLogic argues the larger share would better compensate the DAO for the risks attached to borrowable reserves.
Related ReadingPolygon V3 DAI illustrates how much that allocation can matter. TokenLogic proposes raising its reserve factor from 25% to 70%, with a modeled supply APY reduction of 270 basis points, or 2.70 percentage points. The same line projects $94,373 in additional annual DAO revenue.
With the amount of borrower interest unchanged, suppliers’ share would fall from 75% to 30%. The treasury would receive the difference. In that fixed-input model, the revenue gain comes from a smaller payment to lenders, without requiring more borrowing or a higher price for the same loan.
The comparison with other stablecoins shows that the proposal does not apply a uniform yield reduction. TokenLogic models cuts of 173 basis points for Avalanche DAI.e, 78 for Avalanche USDt and 61 for Avalanche USDC. Their proposed reserve factors are 90%, 25% and 25%, respectively.