Crypto Projects' New Obsession: Buying Back Their Own Tokens

Token buybacks are becoming increasingly popular among crypto projects, with $640 million spent on this practice so far in 2026, a 17% increase from the same period last year. Hyperliquid and Pump.fun account for almost 90% of the current spend.

The goal behind token buybacks is to create demand for a token by buying it back and burning it, which can reduce supply and make each token more valuable. Orest Gavryliak, chief legal officer at 1inch, says that projects implement revenue-funded buybacks and burns with one of two objectives in mind: either to decrease the token supply or to demonstrate the rationale for investing in protocol revenues.

However, critics argue that every dollar a protocol spends buying its token is a dollar it could have spent hiring developers, expanding the business, strengthening its balance sheet, or building the product. MacPherson from Spark notes that 'the question should be: what is the highest-value use of the next dollar of surplus?' and that reinvesting capital at attractive returns can be 'far more valuable' than simply distributing revenue as it arrives.

While buybacks may offer a solution, they can also be just another piece of financial engineering that makes a token look more valuable without fixing the issues underneath. Gavryliak points out that 'if the buybacks stopped, would there still be a reason to hold the token? If the answer is no, the problem remains.'