Crypto Valuations Could Double as Protocols Route Revenue Back to Token Holders

Bitwise Chief Investment Officer Matt Hougan believes that cryptocurrency valuations could double as blockchain protocols increasingly route revenue back to token holders through buybacks and burns. In a memo titled 'Crypto's Revenue Revolution,' Hougan argues that the era of networks generating massive economic activity without returning value to token holders is over.

The shift in protocol design has already begun, with several notable examples including Hyperliquid, Uniswap, Aave, Pump.fun, and Lighter. These protocols have implemented revenue-to-token mechanisms, using fees from network activity to purchase native tokens from the open market and remove them from circulation.

Hougan pointed out that Solana's SGP-0003 proposal aims to increase the network's fee burn rate by up to 14 times if approved. Aptos has also raised gas fees tenfold, leading to a significant increase in transaction activity and annual token burns.

According to Hougan, regulatory changes have contributed to this shift, with the SEC's friendly approach to revenue-sharing structures reducing legal uncertainty for protocols. However, he acknowledged that token holders do not carry the same legal claims as corporate shareholders, and community-set tokenomics can evolve over time.