Can token buybacks make tokens more valuable?

Original Author: Christina Comben (Cointelegraph Contributor, Magazine, September 4, 2026)

Translated by: Deep Tide TechFlow

Deep Tide Overview: Crypto projects are pouring hundreds of millions of dollars into "buying back their tokens." As of 2026, the buyback scale has reached approximately $640 million, an increase of about 17% year-on-year, with Hyperliquid and Pump.fun accounting for nearly 90% of this.

On the surface, buybacks (and burns) can create demand, shrink supply, and support token prices, providing holders with a more intuitive connection to "the protocol is making money"; however, on the flip side, every dollar spent on buying tokens cannot be used to hire developers, expand business, or bolster the balance sheet.

This article draws on the perspectives of 1inch, Bitwise, and Spark to point out: buybacks can support the token economy but do not necessarily improve the underlying business, nor can they save protocols that are already unsustainable. As tokens increasingly resemble stocks and regulators begin to question "where the value really comes from," the real question may be: if buybacks stop, do you still have a reason to hold this token?

Crypto projects are spending hundreds of millions to buy back their tokens. But are buybacks really creating lasting value, or are they just making tokens look more valuable than they actually are?

As the industry matures and increasingly borrows from traditional finance (TradiFi), crypto projects are beginning to mimic the practices of publicly traded companies. The latest trend stirring the crypto space is token buybacks: using revenue to repurchase their own tokens.

So far in 2026, crypto projects have spent about $640 million on this, an increase of about 17% compared to the same period last year, and significantly higher than the mere $366,000 in 2024. Among them, Hyperliquid and Pump.fun have consumed nearly 90% of the current expenditure.

So where did this trend suddenly come from?

Buybacks can create demand for tokens, while burns can shrink supply and make each token more valuable. This dynamic can create upward pressure on token prices.

It also provides token holders with a more concrete connection to the economic activities of the underlying protocol. Orest Gavryliak, Chief Legal Officer of decentralized exchange aggregator 1inch, told Magazine:

"When projects implement buybacks and burns supported by revenue, they usually have one or two goals in mind: either to reduce the supply of tokens in circulation or to demonstrate the logic of revenue generation to the market."

Gavryliak stated that telling users "we bought back and burned tokens" is "much more straightforward" than explaining how governance works, how fees are determined, or how the protocol is used.

Why Crypto Projects Buy Their Own Tokens

You might wonder if it’s counterproductive for projects to buy their own tokens. After all, projects typically sell tokens to raise funds to cover costs.

Almost, but there is a key premise. Using generated revenue to buy back tokens (to hold or burn) establishes an implicit connection between the success of the protocol and the value of the tokens, which has long been a pain point for crypto projects. As Max Shannon, Senior Research Associate at Bitwise Europe, explained:

"Buybacks and burns remain an effective means of creating value for token holders: they create sustained buying pressure for tokens in the open market, directly tying the success of the tokens to the adoption of the platform."

This represents a significant shift for an industry that has been obsessed with chasing narratives or betting on the "greater fool theory" over the past few years; those buying Fartcoin or Peanut the Squirrel were not doing so for solid economic models.

Some protocols are much more aggressive in this regard. For example, Hyperliquid uses 99% of its revenue for buybacks and burns of HYPE; Pump.fun allocates 50% of its revenue for buybacks and burns of its own tokens, with a total value of $446.65 million of PUMP removed from circulation.

Image: HYPE Burns. Source: Hyperliquid

DeFi infrastructure protocol Spark offers a slightly different model: according to its co-founder and CEO Sam MacPherson, it has cumulatively bought over 143 million SPK through publicly funded market buybacks.

However, these tokens have not been burned but are kept in Spark's treasury to reward long-term participants in the ecosystem. MacPherson told Magazine that the focus is not merely on reducing supply:

"Token holders should participate in the long-term economic success of the protocol, rather than just receiving a dividend every time the protocol generates revenue."

He said that buybacks allow Spark to establish this alignment of interests while "retaining flexibility on how and when to deploy the purchased SPK," making the tokens economically meaningful rather than reducing them to "a simple dividend mechanism."

Token buybacks are also a highly tax-efficient way to return revenue to holders, as users do not have to bear a heavy tax bill for dividends or rewards.

Is Buying Tokens Really the Best Use of Money?

While the above logic sounds incredibly rational, the bigger question is: is buying back their own tokens really the best use of project funds?

It may not hold true in all cases. MacPherson said:

"The question should be: what is the highest value use of the next dollar of surplus?"

He stated that if a protocol can reinvest its capital with attractive returns, that might be much more valuable than "distributing revenue as soon as it arrives."

Image: PUMP Burns. Source: Pump.fun

Buybacks can support the token economy but do not necessarily improve the underlying business.

There is also no ironclad guarantee that buybacks will translate into higher token prices. Pump.fun has been aggressively buying back and burning PUMP since July 2025, yet the token is still about 50% lower than its historical high in September 2025. The gains UNI experienced after Uniswap launched the UNIfication proposal in November 2025 have also retraced by about half.

Shannon pointed out that there are "many factors" contributing to these price movements, so they do not prove that buybacks have failed, but:

"They prompt investors to debate whether these startup projects should reduce the share of revenue committed to buybacks and burns and reinvest more back into the team and the project itself."

Investors should carefully distinguish between "buyback schemes that drive up token prices" and "successful business models."

A protocol that can generate real surplus and is sustainable may determine that spending some money on buying tokens is the best choice; however, a struggling project may simply be trying to leverage buybacks to boost prices. MacPherson bluntly stated:

"Buybacks will not make an unsustainable protocol sustainable."

When Tokens Start to Resemble Stocks

Although token buybacks superficially resemble stock buyback programs, this does not mean that tokens are becoming more like stocks.

Image: UNI has fallen about 50% since it began buyback and burn. Source: Coingecko

Shareholders own a part of the company and may enjoy voting rights, dividend rights, or claims on residual assets. However, token holders typically do not possess these equivalent legal rights, which Orest believes is a crucial distinction. "This is a market mechanism, not a legally enforceable right," he said.

MacPherson described SPK as a form of "pseudo-equity" for an on-chain protocol. Although the legal ownership structure in the traditional sense does not exist, economically, Spark is "trying to create many of the same features: participation in governance, long-term alignment, and a mechanism that allows those most loyal to the protocol to benefit from its success."

When Buybacks Start to Resemble Dividends

However, as crypto begins to mimic TradiFi buybacks, clouds may be gathering on the horizon, as regulators ponder what these mechanisms really mean.

Although the 2025 Digital Asset Market Clarity (CLARITY) Act is still a draft and should not be viewed as established law, Gavryliak stated that its proposed framework points to a key question: where does the value of tokens actually come from?

"If the value comes from the functionality of the network itself, then the asset looks like a commodity; but if the value is based on the project team's efforts in delivery, marketing, or providing returns to token holders, then it has become a security. Ultimately, don’t dress tokens in the garb of stocks and expect them to still be commodities."

At the end of the day, crypto investors want to know what is underpinning the tokens: revenue, users, sustainable economic models, and some credible way for tokens to benefit from these things.

While buybacks may offer one solution, they could also just be another form of financial engineering that makes tokens appear more valuable than they actually are without addressing the underlying issues, as Gavryliak stated:

"If buybacks stop, will there still be a reason to hold this token? If the answer is no, then the problem runs deeper than the token economy."