Aave’s exploration in DeFi insurance, particularly through its Safety Module and proposed Umbrella system, significantly impacts its token value by enhancing security. The Safety Module, with nearly $375 million staked, acts as a decentralized insurance fund, mitigating shortfall risks and boosting investor confidence. The Umbrella system further protects against bank runs, reinforcing stability. These upgrades reduce systemic risks, making Aave a safer platform, which can increase $AAVE demand as users seek secure DeFi options. Improved safety also attracts more liquidity, potentially elevating token value through higher staking rewards and governance participation. However, the effectiveness depends on execution and market perception—overhauls like revenue redistribution and buybacks could amplify value if successful, but any flaws might temper gains. Overall, Aave’s focus on security strengthens its position, likely enhancing $AAVE’s long-term value proposition.