AAVE Price Surge: New Governance Proposal Fuels 21% Breakout! Could It Surpass $228 Resistance Next?

AAVE is the market’s top performer, rising more than 21% in one day. This sudden spike comes with the rise of a pivotal AAVE governance proposal that seeks to enhance AAVE tokenomics, revenue redistribution, and liquidity management. With a 94% explosion in trading volume, investors are now wondering if AAVE’s momentum is here to last.

AAVE’s Explosive Growth and Market Trends

AAVE has been consistently growing its market capitalization for the last two years. The asset has surpassed major resistance levels at $191.36 and $209.74 on the latest upsurge. The rise is primarily due to the proposal for governance, which describes a strategic overhaul of the AAVE tokenomics update.

The new proposal is set to increase revenue sharing for users staking their AAVE tokens. AAVE DAO also wants to introduce a self-protection protocol called “Umbrella,” which will protect users from losses in case of market crashes.

The Role of GHO Stablecoin in AAVE’s Growth

AAVE’s rapid expansion can be linked to the rising supply of its GHO stablecoin growth, which recently crossed $200 million. The revenue generated from GHO has allowed AAVE to accumulate $115 million in cash reserves since mid-2024.

CD: AAVE Jumps 21% as AAVE DAO Reveals its ‘Most Important’ Proposal

AAVE's DAO has announced a major proposal that has driven the price of its token, AAVE, up by 21%. Since mid-2024, the platform's cash reserves have surged by 115% to reach $115 million,……

— Cosmic Meta Digital (@CosmicMetaX) March 5, 2025

AAVE’s updated tokenomics focus on distributing protocol revenue more efficiently. A larger portion of the earnings will be shared with users who stake AAVE, incentivizing long-term holding and strengthening the ecosystem. This move aligns with AAVE’s goal to increase user participation and network security.

AAVE’s Technical Analysis and Market Outlook

A move past $216 might see AAVE retest the critical $228 resistance level. The sustained uptrend of the asset could drive the price to new peaks. Assuming the market sentiment turns bearish, the asset might rally downward to the $202 range. The weakening buying pressure raises a potential risk of a drop below $187 support.

Graph 1 – Provided by Sarayucyzie, published on TradingView, March 5, 2025

The Chaikin Money Flow (CMF) indicator, aligned at 0.16, suggests positive money flow with strong buying pressure in the market. Meanwhile, AAVE’s daily trading volume has surged by over 94.82%. In addition, the Bull Bear Power (BBP) value of 22.74 implies that bulls have control over the market. AAVE’s daily relative strength index (RSI), resting at 58.20, signals neutral-to-bullish momentum in the market.

Future Outlook and Market Impact

With community discussions underway, AAVE governance proposal discussions are expected to proceed with a formal on-chain vote in the coming weeks. If approved, the proposed updates will significantly enhance AAVE’s token utility and reinforce its position in the DeFi market.

Moreover, since AAVE’s market share increased quarter by quarter over the last two years and the GHO stablecoin expansion exceeded $200 million in supply, the protocol is demonstrating resilience. The passing of the governance proposal could provide a precedent for subsequent innovations in the DeFi sector, further enhancing AAVE’s appeal to long-term investors.

Final Thoughts: What’s Next for AAVE?

The passage of AAVE’s governance proposal would be a watershed moment for the protocol. With a more robust revenue-sharing mechanism, more token buybacks, and enhanced risk protection, AAVE is setting itself up for long-term prosperity. The recent AAVE Price Surge might be the precursor to a bigger breakout. 

Investors will be paying close attention to the forthcoming governance vote to determine whether AAVE’s upward trend holds. If AAVE continues on its upward trend, the asset may break past $216 and test the $228 resistance point, even further cementing its bullish momentum.