Crypto’s Buyback Boom Tests the Industry’s Financial Maturity

As token buybacks gain popularity in cryptocurrencies, Amir Hajian, head of research at market-making firm Keyrock, warns in a new report that every dollar spent on token buybacks is a dollar diverted from growth and innovation, highlighting the hidden opportunity costs of trust.

Token buybacks involve blockchain projects that buy back their own tokens from the open market, similar to stock buybacks. The strategy siphons circulating supply from the market, creating scarcity and potentially increasing the value of the token to signal confidence to investors.

The rise of token buybacks represents a turning point in how cryptocurrencies define maturity, Hajian argues in a report shared with CoinDesk, writing that what began as an effort to prove that protocols can return value as companies has become a stress test of their financial realism. The key point is whether the protocols can buy back with central bank restraint rather than the jerky reflexes of a bull market.

Much of that capital for buybacks comes from coffers rather than recurring revenue, showing how quickly the pursuit of legitimacy can exhaust future runway.

With clearer rules taking shape in the US for crypto and protocols finally generating consistent fee income, token buybacks have emerged as the preferred way to tie revenue to holder value.

Hajian found that protocol payments to token holders have grown by more than 400% since 2024, reaching nearly $800 million in the third quarter of 2025.

Across the 12 revenue sharing protocols studied, teams returned an average of 64% of total revenue to holders, far more than traditional DAOs, which reinvest roughly three-quarters of spending into growth and development.

Hajian writes that this propensity for distributions over reinvestments has forced the protocols to face limits on one-time treasury spending. As markets mature and yields normalize, projects can no longer afford buybacks that see capital as infinite or timing as irrelevant.

In response, some teams are rethinking how and when value should be returned to holders, tying buybacks to valuation metrics, cash flow strength and market conditions rather than fixed percentages.

Hajian points to the rise of trigger and option-based models as early signs of this shift, which aim to make buybacks counter-cyclical, yield-sensitive and sustainable beyond the next bull cycle.

Trigger-based systems tie spending to measurable fundamentals such as valuation multiples or fully diluted value bands, increasing allocations when tokens look undervalued and decreasing them when prices rise.

Option-based structures go a step further and allow protocols to sell covered stakes and earn premium income while committing to future purchase levels, a proposition that generates income even if no redemptions occur.

Hajian argues that these models together reflect a mature approach to tokenomics, and writes that they are healthy for treasury management because they link buybacks to actual market conditions.

The report also warns that execution quality remains an underappreciated risk.

Most projects use taker orders that drain liquidity from thin order books and exaggerate price swings once buying stops. Calibrating buybacks to organic volume and relying on producer orders, Hajian writes, would allow protocols to add liquidity instead of consuming it.

So when should the token buyback happen?

A protocol should only initiate buybacks when its revenues are recurring, its treasury can cover at least two years of operation, and its valuation multiples indicate that the token is trading below fundamentals, Hajian argues.

Mature projects tend to initiate buybacks when financial strength is evident: Revenues are stable, market liquidity is high, and protocol valuations have reached levels where capital returns make economic rather than promotional sense.

In contrast, newer teams often introduce buybacks too soon to attract users or attention, mistaking visibility for value. These early buybacks drain reserves needed to fund product, growth and research and development, Hajian writes.

It could be that the real test is not the presence of a buyback policy, but the discipline to wait for the fundamentals to justify it. Buybacks are not proof of success, but rather a measure of whether a cryptocurrency can evolve from pledging to profit driving.