Aave plan could cut some lenders’ share of interest by 60%
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 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.
Reserve Factor Changes
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.
Polygon 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.
Uneven Yield Cuts
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.
TokenLogic identifies Polygon DAI as a legacy reserve and explicitly uses lower returns as an incentive to move liquidity out of declining markets. For savers choosing where to lend stablecoins, those reductions change the return offered for keeping liquidity in the affected reserve.
Market Implications
A separate Aavescan observation puts the Polygon DAI pool in perspective. Its November 12 midnight-UTC snapshot records 3.30 million DAI deposited, 2.65 million borrowed and a 4.81% supply APR, excluding historical incentives.
The largest reserve-factor percentages do not necessarily impose the largest yield cuts. TokenLogic proposes 100% factors for selected bitcoin-wrapper and liquid-staking collateral reserves whose lending APYs are already close to zero. Its model puts the lost lending yield in that group at no more than 1 to 2 basis points.
For Ethereum V2, TokenLogic proposes raising five remaining borrowed reserves to 99.99%, directing nearly all their interest to the DAO. It expects reduced returns to encourage exits. If suppliers withdraw, utilization could rise and borrowing costs could increase, creating pressure on borrowers to close positions.
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