2025 marked an "industrial revolution" in the financial discipline of the cryptocurrency market. In that year, on-chain protocols demonstrated unprecedented cash flow generation capabilities and attempted to reshape the underlying logic of token economics through total buyback expenditures exceeding $1.4 billion. This figure represents exponential growth compared to previous years, driven not only by the maturation of DeFi protocol business models but also by the structural shift in the US regulatory environment—particularly the advancement of the Digital Asset Markets Clarity Act and the GENIUS Act, which provided a compliant path for the supply management of "digital goods."
However, the investment of capital did not yield equal value capture. This article analyzes the extreme polarization in the buyback market in 2025: on the one hand, Hyperliquid achieved several-fold growth in token price with a buyback scale of over $640 million (accounting for nearly 46% of the total market), establishing "net deflation" as the core anchor for asset pricing; on the other hand, Jupiter and Helium, despite investing tens of millions of dollars, were unable to combat structural inflation on a massive scale and ultimately discussed halting their buyback programs in early 2026, shifting towards growth incentives. Furthermore, the case of Pump.fun reveals how aggressive buybacks can degenerate into exit liquidity in the absence of a long-term lock-up mechanism.
This article uses the "Net Flow Efficiency Ratio" (NFER) as a key indicator to evaluate the effectiveness of buybacks. Data shows that buybacks can only effectively transmit to secondary market prices when the velocity of buyback funds is significantly higher than the velocity of token unlocking and inflation (NFER > 1.0). Conversely, when NFER < 1.0, buyback funds only act as a "buffer" and may even accelerate the selling by whale.
As Helium and Jupiter shift towards user subsidies, we observe that Web3 protocols are experiencing a "value stock vs. growth stock" divide, similar to the traditional stock market: mature protocols capture value through buybacks and dividends, while growth protocols need to build network effect moats through capital expenditures.
1. Summary of Header Encryption Protocol Repurchase in 2025
In 2025, buybacks will mainly take two forms:
Fee conversion models, such as Hyperliquid and Aave, directly allocate a portion of the protocol's revenue to purchase tokens. This model offers high transparency and is typically proportional to protocol usage.
Treasury/revenue burning model: such as Helium and Pump.fun. The project team uses the earned revenue to buy back tokens and burn them, or lock them up. This is more often seen as a deflationary measure.
Notably, Hyperliquid topped the list with over $640 million in buybacks, accounting for nearly half of the total and becoming the "King of Buybacks" of the year. Meanwhile, established DeFi giants like MakerDAO (Sky) and Aave remained stable, consistently contributing tens of millions of dollars in buybacks. The Solana ecosystem was active, with projects like Jupiter, Raydium, and Pump.fun contributing significant buyback volumes, but this was accompanied by considerable controversy.
The actual effectiveness of buyback strategies is extremely polarized. On the one hand, projects like Hyperliquid (HYPE) and Aave (AAVE) have achieved relative price stability through buybacks, fluctuating widely in line with Bitcoin rather than plummeting. On the other hand, projects like Jupiter (JUP) and Helium (HNT), despite investing heavily (US$70 million and millions of dollars in monthly revenue respectively), have encountered price crashes or market indifference.
Analyzing these projects reveals that simple buybacks, if unable to overcome structural selling pressure on a massive scale or lacking a strong connection to protocol growth, will become merely "exit liquidity" for early investors or the team. Of course, this might also be the purpose behind some projects initiating buybacks.
| Project Name | Annual repurchase amount (estimated) | Annual release/unlock amount (estimated) | NFER | Price performance | in conclusion |
|---|---|---|---|---|---|
| Hyperliquid (HYPE) | ~$1.2 billion | ~$350 million | 3.42 | Surge (4x) | Strong net deflation. Buying activity far exceeds selling pressure, resulting in extremely high price elasticity. |
| Aave (AAVE) | ~$0.5 billion | ~$0 (close to full circulation) | >10 | Steady rise | Net deflation. Mature assets; buybacks directly increase scarcity. |
| MakerDAO (Sky) | ~$0.96 billion | Low (low inflation) | High | Fluctuations | Theoretically, there is net deflation, but it is affected by non-market factors such as brand repositioning. |
| Pump.fun (PUMP) | ~$138 million | N/A (Fully circulated but with high turnover) | Low | Plunge (-80%) | Structural failure. Lack of lock-up periods; buybacks were swallowed up by speculative trading. |
| Jupiter (JUP) | ~$0.7 billion | ~$1.2 billion | 0.06 | Plunge (-89%) | Severe net inflation. Buybacks account for only 6% of the selling pressure, a drop in the ocean. |
| Raydium (RAY) | ~$100 million | High-liquidity mining | <0.5 | poor performance | Net inflation. Emissions are growing faster than buybacks. |
Under the Net Flow Efficiency Ratio (NFER) metric, we can see some objective patterns that reveal the significant differences in the performance of repurchase projects. First, the calculation method for NFER is as follows.
$\text{NFER} = \frac{\text{Annualized Buyback Volume}}{\text{Annualized Inflation Valuation (Unlocks + Emissions)}}$
The data in the table shows that:
An NFER > 1.0 is a necessary condition for price increases. Only when the repurchase funds are sufficient to cover all structured sell orders (miners, team, early investors) will the price rise driven by marginal buying.
An NFER < 0.1 means that buybacks are a complete waste. In this case, stopping buybacks and shifting focus to fundamental building is a rational financial decision.
In 2025, there is no simple linear positive correlation between the size of the buyback amount and the token price performance.
1.1 Stable Performance Group: Mechanism and Growth Resonance
Hyperliquid (HYPE) • Buyback size: ~$644.6 million.
• Mechanism: The Assist Fund mechanism uses approximately 97% of exchange fees for buybacks.
• Performance: Prices performed extremely strongly in 2025, even driving a revaluation of the entire Perp DEX sector.
• Reasons for success: The extremely high repurchase rate (almost all revenue is repurchased) combined with explosive product growth (market share is captured from CEX), forming a "positive flywheel".
Aave (AAVE) • Buyback size: Approximately $50 million annually ($1 million per week).
• Mechanism: The protocol's excess reserves are used to purchase AAVE via a "Fee Switch".
• Performance: Prices are rising steadily and showing significant resilience in the second half of 2025.
Bitget Token (BGB) • Buyback Scale: Quarterly burning; approximately 1.58 million BNB equivalent (refer to BNB model) worth of BGB will be burned in Q1 2025. Bitget burned 30 million BGB (approximately US$138 million) in Q2 2025.
• Mechanism: Strongly tied to centralized exchange operations, and BGB is empowered as a Layer 2 (Morph) Gas token.
• Performance: Prices hit a new high (ATH) of $11.62.
• Reasons for success: In addition to the scarcity created by buybacks, the most important factor is the expansion of utility. BGB has been upgraded from a single exchange credit to a public blockchain gas.
1.2 Controversial Group: The Futility of Fighting the Trend
Pump.fun (PUMP) • Buyback size: ~$138.2 million.
• Mechanism: 100% of daily revenue is used for buyback and destruction.
• Performance: Prices have fallen 80% compared to ATH.
• Reasons for failure: A classic case of "using buybacks to nurture whale." Due to the highly concentrated token distribution, buyback funds became a liquidity outlet for large holders to unload their holdings. Furthermore, the meme industry's focus shifts extremely quickly, making it difficult for infrastructure tokens to capture sustained value.
Sky (formerly MakerDAO) (SKY) • Buyback size: ~$96 million.
• Mechanism: Smart Burn Engine.
Performance: Neutral to weak, below expectations.
• Reasons for failure: Chaos surrounding the rebranding. Concerns arose regarding the migration of MKR to SKY (a 1:24,000 split) and the "freeze" feature of the USDS stablecoin. Despite the large buyback amount, governance uncertainty dampened buying confidence.
Raydium (RAY) • Buyback amount: ~$100.4 million.
• Mechanism: A portion of the transaction fees will be used for repurchase and destruction.
Performance: High volatility, failing to establish a long-term upward trend.
• Reason: Raydium, as an AMM DEX, faces extremely severe liquidity mining emissions. To attract liquidity, the protocol must continuously issue new RAY. Buyback orders are insufficient to cope with the massive inflationary selling pressure.
2. Classification and Evolution of Value Capture Mechanisms
In our practice in 2025, we observed that "buybacks" are not a single model, but have evolved into several complex variations. Each model operates differently in the tokenomics framework and elicits distinct market responses. Next, we will delve deeper into buyback mechanisms, exploring which type of buyback mechanism is suitable for which size of project, or whether it is even appropriate to initiate a buyback program at all.
2.1 Fee Conversion and Cumulative Model
Representative cases: Hyperliquid, Aave
The core of this model lies in directly converting the real revenue 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 the Assistance Fund, which automatically receives approximately 97% of the transaction fees generated by transactions.
Mechanism details: The fund continuously purchases HYPE tokens on the secondary market. By the end of 2025, the fund had accumulated nearly 30 million HYPE tokens, worth over $1.5 billion.
Market psychology: This pattern creates a visible and continuously growing buying pressure. Market participants not only see the current buying but also anticipate increasing buying pressure as trading volume grows. This anticipation propels HYPE to the forefront of value discovery.
Aave's "Vault Optimization": The Aave DAO has proposed through governance that approximately $50 million of its annual protocol revenue be used to repurchase AAVE.
Strategy Difference: Aave is not in a hurry to burn these tokens, but rather treats them as "productive capital." These repurchased AAVE tokens are used to replenish the ecosystem's security modules or as a reserve for future incentives. While this approach does not immediately reduce the total supply, it significantly reduces the circulating supply and enhances the protocol's resilience.
2.2 Radical Destruction Mode
Representative examples: Pump.fun, MakerDAO (Sky), Raydium
This is the most traditional deflationary model, which aims to increase the value of a single currency by permanently reducing the supply.
Pump.fun's "zero-sum game": As a Memecoin launch platform, Pump.fun used all of its revenue (at one point reaching millions of dollars per day) to buy back and burn PUMP tokens.
Limitations: Despite burning $138 million worth of tokens, the price of PUMP plummeted by 80%¹. This was because PUMP lacked a lock-up mechanism and long-term utility, making the buyback funds an excellent exit strategy for speculators. This demonstrates that in the absence of a "reason to hold," simple deflation cannot counteract selling pressure.
Sky (MakerDAO): It uses a "smart burn engine" to purchase and burn SKY using stablecoin surpluses generated from over-collateralization. Despite the robust mechanism, the benefits of burning were overshadowed by governance uncertainties during the chaotic period of rebranding.
2.3 Trust Lock-up Mode
Representative case: Jupiter
Jupiter is attempting to balance deflation and reserves through a middle ground: 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 its fees to buy back JUP and locks them up for 3 years.
Market feedback: Ineffective. The market viewed the "3-year lock-up" as "delayed inflation" rather than "permanent deflation." Faced with massive unlocking pressure, even if the tokens temporarily exited circulation, the market tended to factor in future selling pressure into the upfront pricing.
3. Net Flow Theory: The Mathematical Essence of Buyback Success or Failure
By comparing Hyperliquid, Aave, Jupiter, and Pump.fun, we can identify three core variables that determine the success or failure of a buyback: net deflation rate, market psychology, and project lifecycle stage.
3.1 Variable 1: Net Deflation Rate (Repurchase Amount vs. Emissions) Whether repurchases can drive up prices depends not on the absolute amount of the repurchase, but on the "net flow". $\text{Net Flow} = \text{Repurchase and Burn Amount} – (\text{Team Unlocking} + \text{Investor Unlocking} + \text{Staking Emissions})$
Hyperliquid is the only top-level protocol to achieve "net deflation" in 2025.
Buyback program: Annualized buyback amount reaches $1.2 billion (estimated based on Q3/Q4 data).
Release Phase: For most of 2025, HYPE will be in a phase of low circulation and low release. Although there will be a core contributor unlock of approximately 9.92 million tokens (about 3.66% of the circulating supply) in November, this selling pressure will be completely covered relative to its massive buyback volume.
Calculation results:
$\text{Net Flow} \approx \$100M/\text{monthly (buying)} – \$35M/\text{monthly (unlocking selling pressure)} = +\$65M/\text{monthly (net buying)}$
3.2 Sailing Against the Wind: Jupiter's Inflation Trap
Jupiter illustrates the helplessness when repurchase agreements encounter massive inflation.
Buyback side: Annual expenditure is approximately $70 million.
On the unlocking side: JUP faces an extremely steep unlocking curve. In early 2026, JUP faces approximately $1.2 billion in token unlocking pressure, with an additional monthly linear unlocking of approximately 53 million tokens (approximately $11 million).
Arithmetic result:
$\text{Net Flow} \approx \$6M/\text{monthly (buying)} – \$10M+/\text{monthly (unlocking selling pressure)} = -\$4M/\text{monthly (net selling pressure)}$
Market dynamics: With such a massive negative net inflow, the $70 million buyback effectively became "exit liquidity" for early investors and the team to unlock tokens. Market participants recognized this and therefore chose to sell rather than hold when the buyback occurred. Solana co-founder Anatoly pointed this out: the protocol should accumulate cash and conduct a one-time large-scale buyback in the future, thereby forcing the current unlocked tokens to trade at a "future expected price," rather than directly giving money to the unlocking pool as it is now.
4. A Major Strategic Shift: From "Market Stabilization" to "Infrastructure Development"
In early 2026, with Jupiter and Helium announcing the discontinuation or reassessment of their buyback programs, the industry underwent a profound reflection. This trend indicates that Web3 projects are shifting from simple "financial engineering" (boosting prices through buybacks) back to the logic of "business operations" (growth through investment).
4.1 Helium (HNT): User acquisition cost is better than repurchase.
On January 3, Helium founder Amir Haleem announced the cessation of HNT buybacks, citing a simple and direct reason: "The market doesn't care whether the project team buys back the HNT."
Background: Helium Mobile's monthly revenue reached $3.4 million. Part of this money was previously used to buy back HNT, but the price of the token remains weak.
New strategy: Redirect the funds to subsidize hardware, acquire new users, and expand network coverage.
Logical Restructuring: For the DePIN project, network effects (number of nodes, user scale) are its core competitive advantage. Lowering the user threshold through subsidies can attract more active users, who will continue to consume data points in the future, thus generating an endogenous and rigid demand for token burning. This "organic burning" is far more valuable than the project team's artificial "buyback and burn."
Return on Investment (ROI) Analysis: A $1 million buyback may only maintain the price stability for a few days; however, using $1 million for subsidies may bring in 10,000 long-term paying users, who will contribute far more than $1 million in value over their lifetime value (LTV).
4.2 Jupiter (JUP): Growth Incentives vs. Capital Returns
Jupiter co-founder Siong Ong also initiated a discussion in the community about stopping the buyback program, proposing to redirect the $70 million in funding to "growth incentives".
Key argument: Buybacks are an inefficient capital allocation when tokens are still in a high-inflation phase. Funds should be used to build moats, such as developing new features (like JupUSD), incentivizing developers, or subsidizing user slippage.
The strategic significance of JupUSD: Jupiter launched JupUSD, a stablecoin backed by the BlackRock BUIDL Fund. Using the repurchase funds to incentivize JupUSD liquidity and adoption will build a deeper moat for the Jupiter ecosystem, ultimately boosting the value of the JUP token far more than providing short-term price support.
4.3 Optimism (OP): Buybacks against the trend
Interestingly, while Jupiter and Helium were withdrawing, Optimism proposed in January 2026 to use 50% of its superchain revenue to buy back OP tokens.
Why go against the trend? This reflects the difference in project lifecycles. Optimism has moved beyond the early stage of ecosystem growth through inflation subsidies, and its superchain is now generating substantial real revenue (Sequencer Fees).
Strategic Intent: Optimism attempts to shed its "useless governance token" label by establishing a hard link between revenue and tokens through buybacks. This demonstrates that buybacks are not a mistake at all stages. When a protocol possesses a solid moat and cash flow, and token valuations need to shift from "price-to-dream ratio" to "price-to-earnings ratio," buybacks become a reasonable approach.
5. Conclusion and Outlook: The New Paradigm in 2026
Financial engineering cannot solve structural inflation; income itself is not a moat, but net cash flow is.
5.1 Conclusion
Buybacks are not a panacea: For projects in a period of high inflation (with a large number of tokens still locked), buybacks are not only ineffective but also a form of plundering the protocol's treasury. They transfer valuable cash flow to early investors who are already exiting the market.
Phase determines strategy:
Growth stage: Funds should be used for user acquisition and network expansion. Buybacks at this stage would be seen as a sign of "management's lack of investment imagination."
Mature stage: Possessing strong cash flow and controllable inflation, it should reward holders through buybacks or dividends to establish a value anchor.
New avenues created by regulation: The passage of the CLARITY Act and GENIUS Act allows for more compliant supply management of "digital goods" tokens. In the future, we will see more cases like Aave, where the government and token supply are managed meticulously within the legal framework.
5.2 Investor Recommendations
When evaluating crypto projects in 2026, you shouldn't buy simply because they've announced a buyback. The following checks must be performed:
Calculate NFER: Is the repurchase amount greater than the unlock value in the next year?
Examine the holder structure: Is it dominated by long-term believers or by "mercenaries"?
Understanding the source of funds: Is the repurchase fund from genuine contractual revenue, or is it simply depleting financing?
In 2026, the market will no longer reward simple "destruction" narratives, but rather those agreements that can leverage cash flow to build a real moat and ultimately achieve net deflation.
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