A proposal published November 12 by TokenLogic would redirect a larger share of borrower interest from lenders to Aave's DAO treasury across 54 reserves spanning 12 Aave V3 instances and Ethereum V2. The plan could generate approximately $4 million in additional annualized DAO revenue based on November 9 balances and rates.
In Aave's lending system, the reserve factor determines what portion of borrower interest goes to the DAO versus to suppliers. TokenLogic argues that a larger share would better compensate the DAO for risks tied to borrowable reserves.
Polygon DAI lenders face steepest cuts
The proposal highlights divergent impacts across markets. For Polygon V3 DAI, TokenLogic proposes raising the reserve factor from 25% to 70%. This change would reduce suppliers' share of borrower interest from 75% to 30%, while modeled supply APY would decline by 270 basis points. The reserve would generate an estimated $94,373 in additional annual DAO revenue.
TokenLogic identifies Polygon DAI as a legacy reserve and explicitly proposes lower returns as an incentive to move liquidity out of declining markets. As of November 12 midnight UTC, the pool held 3.30 million DAI deposited with a 4.81% supply APR.
Uneven yield reductions across stablecoins
Other stablecoin reserves face different cuts. Avalanche DAI.e would see a modeled reduction of 173 basis points with a proposed 90% reserve factor. Avalanche USDt and Avalanche USDC would experience reductions of 78 and 61 basis points respectively, both at 25% proposed reserve factors.
TokenLogic's proposals for bitcoin-wrapper and liquid-staking collateral reserves with 100% reserve factors would result in yield losses of no more than 1 to 2 basis points, as lending APYs for these reserves are already near zero.
Revenue model and behavioral effects
The $4 million revenue estimate uses fixed November 9 balances and rates. TokenLogic acknowledges that the proposal seeks to change supplier behavior, which could alter those inputs. For Ethereum V2, five remaining borrowed reserves would move to 99.99% reserve factors, with the expectation that reduced returns would encourage suppliers to exit.
The proposal lists feedback and escalation to the Aave Improvement Proposal stage as next steps. All yield cuts and revenue projections remain estimates pending formal approval.
