Abstract

2025 marks the "industrial revolution" of fiscal discipline in the cryptocurrency market. In this year, on-chain protocols demonstrated unprecedented cash flow generation capabilities, attempting to reshape the underlying logic of token economics through over $1.4 billion in total buyback expenditures. This figure shows exponential growth compared to previous years, driven not only by the maturity of DeFi protocol business models but also by a structural shift in the U.S. regulatory environment—particularly the advancement of the Digital Asset Market Structure Act and the GENIUS Act, which provide a compliant path for the supply management of "digital commodities."

However, the influx of capital has not led to an equal capture of value. This article analyzes the extreme polarization phenomenon in the buyback market of 2025: on one hand, Hyperliquid achieved a token price increase of several times with a buyback scale exceeding $640 million (accounting for nearly 46% of the market total), establishing "net deflation" as the core anchor point for asset pricing; on the other hand, Jupiter and Helium, despite investing tens of millions of dollars, ultimately discussed halting their buyback plans in early 2026 due to their inability to counter structural inflation on a scale, shifting towards growth incentives. Additionally, the case of Pump.fun reveals how aggressive buybacks can devolve into exit liquidity in the absence of a long-term locking mechanism.

This article uses the "Net Flow Efficiency Ratio" as a key indicator to assess the effectiveness of buybacks. Data indicates that buybacks can effectively transmit to secondary market prices only when the velocity of buyback funds significantly exceeds the velocity of token unlocks and inflation (NFER > 1.0). Conversely, when NFER < 1.0, buyback funds merely serve as a "buffer" and may even accelerate whale sell-offs.

As Helium and Jupiter pivot towards user subsidies, we observe that Web3 protocols are experiencing a division similar to traditional stock markets: "value stocks vs. growth stocks." Mature protocols capture value through buybacks and dividend attributes, while growth-stage protocols need to build network effect moats through capital expenditures.

1. Summary of Buyback Situations of Leading Crypto Protocols in 2025

In 2025, buybacks were mainly divided into two models:

1. Fee Conversion Model: Such as Hyperliquid and Aave. A portion of the protocol's revenue is directly used to purchase tokens. This model has high transparency and is usually proportional to the protocol's usage.
2. Treasury/Revenue Burn Model: Such as Helium and Pump.fun. The project team uses earned revenue to buy back and burn or lock tokens. This is more viewed as a deflationary measure.

Notably, Hyperliquid dominated with a buyback amount exceeding $640 million, becoming the "Buyback King" of the year. Meanwhile, DeFi blue chips like MakerDAO (Sky) and Aave remained robust, continuously executing buybacks in the tens of millions of dollars. The Solana ecosystem showed active performance, with projects like Jupiter, Raydium, and Pump.fun contributing significant buyback volumes, but also accompanied by substantial controversy.

The actual effectiveness of buyback strategies exhibited extreme polarization. On one hand, projects like Hyperliquid (HYPE) and Aave (AAVE) achieved relative price stability through buybacks, oscillating widely alongside Bitcoin rather than plummeting; on the other hand, projects like Jupiter (JUP) and Helium (HNT), despite significant investments (approximately $70 million and several million dollars in monthly revenue respectively), faced price crashes or market indifference.

Analyzing these projects reveals that pure buybacks, if unable to overwhelm structural selling pressure or lack a strong binding with protocol growth, will devolve into "exit liquidity" for early investors or teams. Of course, this may also be the intended purpose of some projects initiating buybacks.

| Project Name | Estimated Annual Buyback Amount | Estimated Annual Unlock Amount | NFER | Price Performance | Conclusion | |------------------------|---------------|------------------|-----------|---------------|------------------------------| | Hyperliquid (HYPE) | ~$1.2 billion | ~$350 million | 3.42 | Surge (4x) | Strong net deflation. Buyback strength far exceeds selling pressure, price shows high elasticity. | | Aave (AAVE) | ~$50 million | ~$0 (nearly fully circulating) | >10 | Steady increase | Net deflation. Mature asset, buybacks directly enhance scarcity. | | MakerDAO (Sky) | ~$96 million | Low (low inflation) | High | Fluctuating | Theoretical net deflation, but interfered by non-market factors like brand restructuring. | | Pump.fun (PUMP) | ~$138 million | N/A (fully circulating but high turnover) | Low | Crash (-80%) | Structural failure. Lack of locking mechanism, buybacks consumed by speculative trading. | | Jupiter (JUP) | ~$70 million | ~$1.2 billion | 0.06 | Crash (-89%) | Severe net inflation. Buybacks only account for 6% of selling pressure, a drop in the bucket. | | Raydium (RAY) | ~$100 million | High (liquidity mining) | <0.5 | Underperforming | Net inflation. Emission speed exceeds buyback speed. |

Under the Net Flow Efficiency Ratio (NFER) metric, we can observe significant objective rules regarding the performance differences of buyback projects. First, the calculation method for NFER is as follows.

$\text{NFER} = \frac{\text{Annualized Buyback Volume}}{\text{Annualized Inflation Valuation (Unlocks + Emissions)}}$

From the data in the table, we can conclude:

• NFER > 1.0 is a necessary condition for price increases. Only when buyback funds are sufficient to cover all structural sell-offs (miners, teams, early investors) can prices rise under the push of marginal buying.
• NFER < 0.1 means buybacks are purely wasteful. In this case, stopping buybacks and shifting towards fundamental development is a rational financial decision.

In 2025, there is no simple linear positive correlation between the size of buyback amounts and token price performance.

1.1 Stable Performance Group: Mechanism Resonance with Growth

Hyperliquid (HYPE) • Buyback Scale: ~$644.6 million. • Mechanism: Assist Fund mechanism, using about 97% of exchange fees for buybacks. • Performance: Price performed extremely strongly in 2025, even driving a reevaluation of the entire Perp DEX track. • Success Reason: Extremely high buyback ratio (almost all income used for buybacks) combined with explosive product growth (market share capturing from CEX), forming a "positive flywheel."

Aave (AAVE) • Buyback Scale: Annualized about $50 million (weekly $1 million). • Mechanism: Through "Fee Switch," excess protocol reserves are used to purchase AAVE. • Performance: Price steadily increased and showed significant resistance to declines in the second half of 2025.

Bitget Token (BGB) • Buyback Scale: Quarterly burn, with about 1.58 million BNB equivalent value (referencing BNB model) burned in Q1 2025. Bitget burned 30 million BGB (about $138 million) in Q2 2025. • Mechanism: Strongly bound to centralized exchange business, and BGB is empowered as the Gas token for Layer 2 (Morph). • Performance: Price reached an all-time high (ATH) of $11.62. • Success Reason: Besides the scarcity caused by buybacks, more importantly, utility expansion. BGB upgraded from a single exchange point to a public chain Gas.

1.2 Controversial Group: Futile Resistance Against Trends

Pump.fun (PUMP) • Buyback Scale: ~$138.2 million. • Mechanism: 100% of daily revenue used for buyback and burn. • Performance: Price dropped 80% from ATH. • Failure Reason: A typical case of "buybacks feeding whales." Due to highly concentrated token distribution, buyback funds became a liquidity outlet for large holders. Additionally, meme track hotspots shift rapidly, making it difficult for infrastructure tokens to capture sustained value.

Sky (formerly MakerDAO) (SKY) • Buyback Scale: ~$96 million. • Mechanism: Smart Burn Engine. • Performance: Neutral to weak, did not meet expectations. • Failure Reason: Confusion from brand restructuring. The migration process from MKR to SKY (1:24,000 split) and the "freezing function" of the USDS stablecoin raised concerns. Despite the large buyback amount, uncertainty at the governance level suppressed buying confidence.

Raydium (RAY) • Buyback Scale: ~$100.4 million. • Mechanism: A portion of trading fees used for buyback and burn. • Performance: Highly volatile, failed to form a long-term upward trend. • Reason: As an AMM DEX, Raydium faces severe liquidity mining emissions. To attract liquidity, the protocol must continuously issue RAY. The buying pressure from buybacks appears powerless against the massive inflationary selling pressure.

2. Classification and Evolution of Value Capture Mechanisms

In the practices of 2025, we observed that "buybacks" are not a single model but have evolved into various complex variants. Each model's role mechanism in token economics and market feedback is distinctly different. Next, we will delve deeper into buyback mechanisms to explore what scale of projects is suitable for which buyback mechanism, or whether they are suitable to initiate buybacks at all.

2.1 Fee Conversion and Accumulation Model

Representative Cases: Hyperliquid, Aave

The core of this model lies in directly converting the real income generated by the protocol into native tokens and removing them from circulation through burning or locking.

• Hyperliquid's "Black Hole Effect": Hyperliquid designed an on-chain fund called Assistance Fund, which automatically receives about 97% of the trading fees generated by the exchange.
• Mechanism Details: This fund continuously buys HYPE tokens in the secondary market. By the end of 2025, the fund had accumulated nearly 30 million HYPE, valued at over $1.5 billion.
• Market Psychology: This model creates a visualized, continuously growing buying pressure. Market participants not only see current buying but also anticipate future buying pressure that will expand with increasing trading volume. This expectation pushed HYPE to a high ground of value discovery.
• Aave's "Treasury Optimization": Aave DAO uses governance proposals to allocate about $50 million of annual protocol revenue for buying back AAVE.
• Strategy Differences: Aave is not in a hurry to burn these tokens but views them as "productive capital." These repurchased AAVE are used to supplement the ecosystem's security module or as reserves for future incentives. Although this practice does not immediately reduce the total supply, it significantly decreases the circulating supply and enhances the protocol's risk resistance.

2.2 Aggressive Burn Model

Representative Cases: Pump.fun, MakerDAO (Sky), Raydium

This is the most traditional deflationary model, aimed at pushing up the value of a single token by permanently reducing supply.

• Pump.fun's "Zero-Sum Game": As a Memecoin launch platform, Pump.fun uses all its revenue (which once reached millions of dollars daily) for buybacks and burning PUMP tokens.
• Limitations: Despite burning tokens worth $138 million, the price of PUMP plummeted by 80%. The reason lies in the lack of a locking mechanism and long-term utility, making buyback funds an excellent exit route for speculators. This proves that in the absence of a "holding reason," pure deflation cannot counteract selling pressure.
• Sky (MakerDAO): Through the "Smart Burn Engine," it uses the surplus generated from over-collateralized stablecoins to buy and burn SKY. Although the mechanism is robust, during the chaotic brand restructuring period, the benefits brought by burning were overshadowed by uncertainties at the governance level.

2.3 Trust Locking Model

Representative Cases: Jupiter

Jupiter attempts to balance deflation and reserves through a middle path: buying back tokens but not immediately burning them, instead locking them in a long-term trust called "Litterbox."

• Mechanism Design: Jupiter commits to using 50% of fees for buying back JUP and locking them for 3 years.
• Market Feedback: Failure. The market views "3-year locking" as "delayed inflation" rather than "permanent deflation." In the face of significant unlocking pressure, even if tokens temporarily exit circulation, the market still tends to factor in future selling pressure in pre-pricing.

3. Net Flow Theory: The Mathematical Essence of Buyback Success or Failure

By comparing Hyperliquid, Aave with Jupiter, Pump.fun, we can distill three core variables that determine the success or failure of buybacks: net deflation rate, market game psychology, and project lifecycle stage.

3.1 Variable One: Net Deflation Rate (Buyback Volume vs. Emission Volume) Whether buybacks can push up prices does not depend on the absolute amount of buybacks but on "net flow." $\text{Net Flow} = \text{Buyback Burn Volume} - (\text{Team Unlocks} + \text{Investor Unlocks} + \text{Staking Emissions})$

Hyperliquid is the only top protocol to achieve "net deflation" in 2025.

• Buyback Side: Annualized buyback amount reaches $1.2 billion (based on Q3/Q4 data projections).

• Release Side: For most of 2025, HYPE was in a low circulation, low release phase. Although in November it faced a core contributor unlock of about 9.92 million tokens (about 3.66% of circulating supply), this selling pressure was completely covered by its massive buyback volume.

• Calculation result:

  $\text{Net Flow} \approx \$100M/\text{month (buying)} - \$35M/\text{month (unlock selling pressure)} = +\$65M/\text{month (net buying)}$

3.2 Sailing Against the Wind: Jupiter's Inflation Trap

Jupiter demonstrates the helplessness when buybacks encounter massive inflation.

• Buyback Side: Annual expenditure of about $70 million.

• Release Side: JUP faces an extremely steep unlocking curve. In early 2026, JUP faces an unlocking pressure of about $1.2 billion in tokens, with approximately 53 million tokens (about $11 million) unlocking linearly each month.

• Arithmetic result:

  $\text{Net Flow} \approx \$6M/\text{month (buying)} - \$10M+/\text{month (unlock selling pressure)} = -\$4M/\text{month (net selling pressure)}$

• Market Game: Under this massive negative net flow, the $70 million buyback funds effectively became "exit liquidity" for early investors and team unlocking tokens. Market participants realized this, thus choosing to sell when buybacks occurred rather than hold. Solana co-founder Anatoly pointed this out: protocols should accumulate cash and conduct a one-time large buyback in the future, forcing currently unlocked tokens to trade at "future expected prices" rather than directly giving money to the unlocking pressure now.

4. Strategic Shift: From "Market Protection" to "Infrastructure Building"

In early 2026, as Jupiter and Helium announced the suspension or reassessment of their buyback plans, the industry underwent profound reflection. This trend indicates that Web3 projects are returning from simple "financial engineering" (pulling up prices through buybacks) to the logic of "business operation" (investing in growth).

4.1 Helium (HNT): User Acquisition Cost Superior to Buybacks

On January 3, Helium founder Amir Haleem announced the cessation of HNT buybacks, with a simple and direct reason: "The market does not care whether the project team buys back."

• Data Background: Helium Mobile's monthly revenue reached $3.4 million. Previously, part of this money was used for buybacks of HNT, but the token price remained weak.
• New Strategy: Redirecting these funds to subsidize hardware, acquire new users, and expand network coverage.
• Logic Reconstruction: For DePIN projects, network effects (number of nodes, user scale) are their core moat. By subsidizing to lower user thresholds, more active users can be brought in, who will continuously consume data credits in the future, generating endogenous, rigid token burn demand. This "organic burn" is far more valuable than the project team's artificial "buyback burn."
• ROI Analysis: $1 million in buybacks may only stabilize the token price for a few days; however, $1 million used for subsidies could bring in 10,000 long-term paying users, who will contribute far more than $1 million in value over their lifetime (LTV).

4.2 Jupiter (JUP): Growth Incentives vs. Capital Return

Jupiter co-founder Siong Ong also initiated discussions in the community about stopping buybacks, proposing to redirect the $70 million funds towards "growth incentives."

• Core Argument: When the token is still in a high inflation phase, buybacks are an inefficient allocation of capital. Funds should be used to build moats, such as developing new features (like JupUSD), incentivizing developers, or subsidizing users' trading slippage.
• Strategic Significance of JupUSD: Jupiter launched the stablecoin JupUSD, supported by the BlackRock BUIDL fund. If buyback funds are used to incentivize JupUSD's liquidity and adoption, it will build a deeper moat for the Jupiter ecosystem, which will have a far greater long-term impact on the value of the JUP token than short-term price support.

4.3 Optimism (OP): Buybacks Going Against the Trend

Interestingly, while Jupiter and Helium retreated, Optimism proposed in January 2026 to use 50% of its superchain revenue for buying back OP tokens.

• Why go against the trend? This reflects the differences in project lifecycle stages. Optimism has passed the early stage where the ecosystem grew through inflationary subsidies, and now its superchain has generated considerable real revenue (Sequencer Fees).
• Strategic Intent: Optimism aims to shed the label of "useless governance token" by establishing a hard connection between "revenue and tokens" through buybacks. This indicates that buybacks are not erroneous at all stages. When a protocol has a solid moat and cash flow, and the token valuation needs to shift from "market cap rate" to "price-to-earnings ratio," buybacks become a reasonable means.

5. Conclusion and Outlook: A New Paradigm for 2026

Financial engineering cannot solve structural inflation; income itself is not a moat; net flow is.

5.1 Conclusion

1. Buybacks are not a panacea: For projects in a high inflation period (with many tokens yet to unlock), buybacks are not only ineffective but also plunder the protocol's treasury. They channel valuable cash flow to early profit-takers who are exiting.
2. Stage Determines Strategy:

• Growth Stage: Funds should be used for user acquisition and network expansion. At this time, buybacks will be seen as "management lacking investment imagination."
• Mature Stage: With strong cash flow and controllable inflation, buybacks or dividends should be used to reward holders and establish value anchors.

New Tracks Brought by Regulation: The passage of the CLARITY Act and GENIUS Act allows for more compliant supply management of "digital commodity" tokens. In the future, we will see more cases like Aave, which finely manage treasury and token supply within the legal framework.

5.2 Investor Recommendations

When evaluating crypto projects in 2026, one should not simply buy in because of "announced buybacks." The following checks must be executed:

• Calculate NFER: Is the buyback amount greater than the unlock value for the coming year?
• Examine Holder Structure: Is it dominated by long-term believers or "mercenaries"?
• Understand the Source of Funds: Are buyback funds coming from real protocol revenue, or are they merely consuming financing?

In 2026, the market will no longer reward pure "burn" narratives but will reward those protocols that can build real moats using cash flow and ultimately achieve net deflation.

About Movemaker

Movemaker is the first official community organization authorized by the Aptos Foundation, jointly initiated by Ankaa and BlockBooster, focusing on promoting the construction and development of the Aptos ecosystem in the Chinese-speaking region. As the official representative of Aptos in the Chinese-speaking area, Movemaker is committed to creating a diverse, open, and prosperous Aptos ecosystem by connecting developers, users, capital, and numerous ecological partners.

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