Decentralized lending platform Aave is presently working on a proposal that will enable a fee switch which will be distributed to holders. This details was shared on the microblogging platform X by its founder Marc Zeller. The founder said in his statement that the Aave DAO has netted about $60 million in profits every year for the last five years.
Aave Chan founder announces fee switch proposal
In his post, Zeller intimated to his audience about the fee switch which is set to occur next week. “Temp check to activate “fee switch” next week,” he said.
Aave is a decentralized lending platform where users take out loans in one digital asset while allowing them to deposit another as collateral. The platform runs on many blockchains and is governed by holders of the token known as the Aave decentralized autonomous organization (DAO).
In a previous post, Zeller mentioned the idea of implementing fees for stakers on the platform. He noted on March 16 that new changes made to the safety module might include distributing fees to stakers on the platform.
Collateral risks management discussions
A fee switch is a feature adopted by platforms to ensure that certain fees or charges are either activated or deactivated. In this case, a fee switch will enable the lending platform to distribute fees collected from transactions to users or tokenholders of the platform. The fee switch will also enable the platform to adjust fees based on the needs of the protocol.
Members of the AaveDAO recently approved a proposal to make changes to the staking fees charged for its stablecoin GHO. This was undertaken to allow the token to maintain its peg. If this proposal is approved, Aave will be following in the steps of Frax Finance, a lending platform that recently reintroduced its fee switch. However, there were discussions in the AaveDAO concerning collateral risks related to Dai (DAI).
