Crypto Valuations Poised to Rise with Revenue-Linked Token Economics

Bitwise CIO Matt Hougan believes that crypto valuations may be poised to rise as more networks route transaction fees toward token repurchases and burns.

In a recent memo, Hougan argued that the market has not fully accounted for the growing link between protocol revenue and native tokens. He cited DeFi and crypto-native projects that already use fees to reduce circulating supply, expecting this approach to spread across DeFi applications and layer-1 ecosystems over the next 12 to 24 months.

Hougan pointed to examples such as Hyperliquid, which generated over $800 million in revenue last year and directed $141 million toward buybacks and burns of its HYPE token. He also mentioned Uniswap's fee plan, where protocol fees can be used to fund UNI burns, and Aave's DAO buyback program purchasing over 205,000 AAVE tokens.

Hougan attributed the increasing interest in revenue-linked token economics to a more favorable regulatory landscape in the US, allowing economic designs to mature and turning 'activity' into a cash-flow analogue through mechanisms like buybacks and token burns.