Token Buybacks and Burns Could Send Crypto Prices Soaring

Bitwise CIO Matt Hougan says token buybacks and burns could drive cryptocurrency values sharply higher. The mechanism, where protocol revenue is directly tied to token buybacks and burns, is spreading across decentralized finance (DeFi) applications and layer-1 networks.

Hougan cited several examples of projects that are already using this structure, including Hyperliquid, Uniswap, Aave, Pump.fun, and Lyra. These projects use revenue earned from fees to repurchase their own tokens or burn them, reducing the number of available tokens in circulation.

According to Hougan, if this trend continues, token prices could rise by at least twofold as investors begin to value tokens based on their cash-generating power rather than just expectations. However, he also noted that token-holder rights and tokenomics changes remain key variables that can impact the success of these mechanisms.

Hyperliquid is a notable example of this trend, having earned over $800 million in revenue last year and using 99% of it for HYPE buybacks and burns. Uniswap has also introduced a structure that links higher protocol activity to a reduction in UNI supply through token burns.