2025 Crypto Buyback Revelation: When $138 million in buy orders can't save the -80% plunge

Summary

The year 2025 marks the “Industrial Revolution” in the financial discipline of the cryptocurrency market. During this year, on-chain protocols demonstrated unprecedented cash flow generation capabilities, with total repurchase expenditures exceeding $1.4 billion, aiming to reshape the fundamental logic of tokenomics. This figure shows exponential growth compared to previous years, driven not only by the maturity of DeFi protocol business models but also by structural shifts in the US regulatory environment—particularly the advancement of the Digital Asset Market Clarity Act and the GENIUS Act, providing compliant pathways for the supply management of “digital commodities.”

However, capital injection has not resulted in equal value capture. This article analyzes the extreme polarization in the repurchase market in 2025: on one side, Hyperliquid achieved a token price increase of several times with over $640 million in repurchases (accounting for nearly 46% of the market), establishing “net deflation” as the core asset pricing anchor; on the other side, Jupiter and Helium, despite investing tens of millions of dollars, failed to counteract structural inflation at scale and began discussing halting repurchase plans in early 2026, shifting toward growth incentives. Additionally, the case of Pump.fun reveals how aggressive repurchases without long-term lock-up mechanisms can turn into exit liquidity for speculators.

This paper uses the “Net Flow Efficiency Ratio” (NFER) as a key indicator to evaluate repurchase effectiveness. Data shows that only when the flow speed of repurchase funds significantly exceeds the speed of token unlocks and inflation (NFER > 1.0) can repurchases effectively transmit to secondary market prices. Conversely, when NFER < 1.0, repurchase funds merely serve as a “buffer,” and may even accelerate whale sell-offs.

As Helium and Jupiter shift toward user subsidies, we observe that Web3 protocols are experiencing a divide similar to traditional stock markets: mature protocols capture value through repurchases with dividend-like attributes, while growth-stage protocols need to build network effects through capital expenditure to create a moat.

1. 2025 Top Protocol Repurchase Summary

In 2025, repurchases mainly follow two models:

1. Fee Conversion Model: e.g., Hyperliquid, Aave. Directly use a portion of protocol revenue to buy back tokens. This model is highly transparent and usually proportional to protocol usage.
2. Treasury/Revenue Burn Model: e.g., Helium, Pump.fun. Projects use earned revenue to buy back and burn tokens or lock them up. This is more viewed as a deflationary measure.

Notably, Hyperliquid accounted for nearly half of the total repurchase volume with over $640 million, becoming the “King of Repurchases” for the year. Meanwhile, blue-chip DeFi projects like MakerDAO (Sky) and Aave remain steady, continuously conducting buybacks worth tens of millions of dollars. The Solana ecosystem, with projects like Jupiter, Raydium, and Pump.fun, contributed large repurchase volumes but also attracted significant controversy.

The actual effectiveness of repurchase strategies shows extreme polarization. On one hand, projects like Hyperliquid (HYPE) and Aave (AAVE) stabilized prices through buybacks, following Bitcoin’s wide oscillations rather than sharp declines; on the other hand, projects like Jupiter (JUP) and Helium (HNT), despite large investments (e.g., $70 million and millions of dollars in monthly revenue respectively), faced price crashes or market indifference.

Analyzing these projects reveals that pure buybacks, if they cannot outweigh structural sell pressure at scale or lack strong linkage to protocol growth, tend to become exit liquidity for early investors or teams. Of course, this may also be the very purpose behind some projects initiating buybacks.

Under the Net Flow Efficiency Ratio (NFER), we observe significant differences in project performance, following some objective rules. The calculation method for NFER is as follows:

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

From the data:

• NFER > 1.0 is a necessary condition for price appreciation. Only when buyback funds are sufficient to cover all structural sell-offs (miners, teams, early investors) can prices rise driven by marginal buyers.
• NFER < 0.1 indicates buybacks are purely wasteful. In such cases, stopping buybacks and focusing on fundamentals is a rational decision.

In 2025, the size of buyback amounts does not have a simple linear correlation with token price performance.

1.1 Stable Performance Group: Mechanism and Growth Resonance

Hyperliquid (HYPE) • Buyback Scale: ~$644.6 million

• Mechanism: Assist Fund mechanism, which allocates about 97% of exchange fees to buybacks.

• Performance: Extremely strong in 2025, even driving revaluation of the entire Perp DEX sector.

• Success Factors: Very high buyback ratio (almost all revenue) combined with explosive product growth (market share grabbing CEX), forming a “positive flywheel.”

Aave (AAVE) • Buyback Scale: ~$50 million annually (~$1 million weekly).

• Mechanism: Via “Fee Switch,” protocol surplus reserves are used to buy AAVE.

• Performance: Steady price increase, with significant resilience in H2 2025.

Bitget Token (BGB) • Buyback Scale: Quarterly burns, e.g., Q1 2025 burned about 1.58 million BNB equivalent (~$138 million). In Q2 2025, burned 30 million BGB (~$138 million).

• Mechanism: Tightly linked to centralized exchange operations, with BGB enabled as Gas token for Layer 2 (Morph).

• Performance: Reached new ATH, hitting $11.62.

• Success Factors: Beyond scarcity from buybacks, utility expansion is key. BGB evolved from exchange points to a Layer 2 Gas token.

1.2 Controversial Group: Fighting Trend with Limited Effectiveness

Pump.fun (PUMP) • Buyback Scale: ~$138.2 million

• Mechanism: 100% of daily revenue used for buyback and burn.

• Performance: Price down 80% from ATH.

• Failure Reason: Typical “buyback to fund whales.” High concentration of token distribution makes buyback funds exit liquidity for large holders. Additionally, meme sector hotness shifts rapidly, making infrastructure tokens hard to sustain value.

Sky (Former MakerDAO) (SKY) • Buyback Scale: ~$96 million

• Mechanism: Smart Burn Engine.

• Performance: Neutral to weak, below expectations.

• Failure Reason: Confusion during rebranding. MKR to SKY migration (1:24,000 split) and USDS stablecoin “freeze” raised concerns. Despite large buyback amounts, governance uncertainty suppressed buying interest.

Raydium (RAY) • Buyback Scale: ~$100 million

• Mechanism: Part of trading fees used for buyback and burn.

• Performance: Volatile, no long-term upward trend.

• Reason: As an AMM DEX, Raydium faces severe liquidity mining emissions. To attract liquidity, the protocol must continually mint RAY. Buyback buy-side struggles against large inflationary sell pressure.

2. Categorization and Evolution of Value Capture Mechanisms

In 2025, we observe that “buyback” is not a single mode but has evolved into various complex variants. Each mode plays a different role in token economics and market feedback. Next, we delve deeper into buyback mechanisms, exploring what scale projects are suitable for which mechanisms, or whether initiating buybacks is appropriate.

2.1 Fee Conversion and Accumulation Models

Representative Cases: Hyperliquid, Aave

This model centers on converting real protocol revenue directly into native tokens, then removing them from circulation via burning or locking.

• Hyperliquid’s “Black Hole Effect”: Hyperliquid designed an on-chain fund called Assistance Fund, which automatically receives about 97% of exchange fees.

• Mechanism Details: The fund continuously buys HYPE tokens on the secondary market. By the end of 2025, it had accumulated nearly 30 million HYPE, worth over $1.5 billion.

• Market Psychology: This creates a visible, continuously growing buy pressure. Participants see not only current buy-ins but also anticipate future expanding buy pressure as trading volume grows, pushing HYPE into a high-value discovery zone.

• Aave’s “Vault Optimization”: Aave DAO, via governance proposals, allocates about $50 million annually from protocol surplus to buy back AAVE.

• Strategy Difference: Aave does not rush to burn these tokens but treats them as “productive capital.” These buybacks are used to supplement ecosystem safety modules or future incentives. While not immediately reducing total supply, this significantly reduces circulating supply and enhances protocol resilience.

2.2 Aggressive Burn Models

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

This is the traditional deflationary approach, aiming to increase token value by permanently reducing supply.

• Pump.fun’s “Zero-Sum Game”: As a memecoin launch platform, Pump.fun used all its revenue (once reaching millions of dollars daily) to buy back and burn PUMP tokens.

• Limitations: Despite burning $138 million worth of tokens, PUMP’s price plummeted 80%. The reason: PUMP lacks lock-up mechanisms and long-term utility, making buyback funds an exit for speculators. This shows that without “holding reasons,” simple deflation cannot counteract sell pressure.

• Sky (MakerDAO): Uses “Smart Burn Engine,” utilizing surplus generated from over-collateralized stablecoins to buy and burn SKY. Although mechanism is robust, during rebranding chaos, the benefits of burning were overshadowed by governance uncertainties.

2.3 Trust Lock-in Models

Representative Case: Jupiter

Jupiter attempts a middle ground, balancing deflation and reserves: buy back tokens but do not immediately burn; instead, lock them into a long-term trust called “Litterbox.”

• Design: Jupiter commits to using 50% of fees for buyback and lock them for 3 years.

• Market Feedback: Failed. The market perceives “3-year lock” as “delayed inflation” rather than “permanent deflation.” Facing massive unlock pressures, even if tokens temporarily exit circulation, the market tends to price in future sell-offs.

3. Mathematical Essence of Net Flow: Success and Failure of Buybacks

By comparing Hyperliquid, Aave with Jupiter, Pump.fun, we can distill three core variables that determine buyback success: Net Deflation Rate, Market Psychology, and Project Lifecycle Stage.

3.1 Variable One: Net Deflation Rate (Buyback Volume vs. Emission Volume)

Whether buybacks can push prices up depends not on absolute buyback amount but on “net flow.” $\text{Net Flow} = \text{Buyback Burned Volume} - (\text{Team Unlocks} + \text{Investor Unlocks} + \text{Staking Emissions})$

Hyperliquid is the only top-tier protocol in 2025 achieving “net deflation.”

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

• Release Side: For most of 2025, HYPE was in a low-circulation, low-release phase. Although in November about 9.92 million tokens (~3.66% of circulation) were unlocked by core contributors, this sell-off was fully covered by the massive buyback volume.

• Calculation:

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

3.2 Headwinds: Jupiter’s Inflation Trap

Jupiter shows the helplessness when buybacks face massive inflation.

• Buyback Expenditure: About $70 million annually.

• Release Pressure: JUP faces an extremely steep unlock curve. Early 2026, about $1.2 billion worth of tokens will unlock, with an additional monthly linear unlock of about 5.3 million tokens (~$1.1 million).

• Arithmetic:

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

• Market Dynamics: Under such large negative net flow, the $70 million buyback becomes exit liquidity for early investors and teams. Participants realize this, leading to selling during buybacks. Solana co-founder Anatoly pointed out that the protocol should accumulate cash and perform a one-time large buyback in the future, forcing current unlocks to trade at “future expected prices” rather than directly selling now.

4. Strategic Shift: From “Market Support” to “Infrastructure”

In early 2026, as Jupiter and Helium announced halts or reevaluations of buyback plans, the industry reflected deeply. This trend indicates that Web3 projects are shifting from simple “financial engineering” (buyback-driven price support) back to “business operation” (growth through investment).

4.1 Helium (HNT): User Acquisition Cost Outperforms Buybacks

On January 3, Helium founder Amir Haleem announced halting HNT buybacks, citing straightforward reasoning: “The market doesn’t care whether the project buys back.”

• Data Context: Helium Mobile’s monthly revenue reached $3.4 million. Previously, part of this was used for buybacks, but the token remained weak.

• New Strategy: Redirect funds to hardware subsidies, user acquisition, and network expansion.

• Logic Rebuild: For DePIN projects, network effects (number of nodes, user base) are core moats. Subsidies lower user entry barriers, attracting more active users who will continuously consume data points, creating an endogenous, rigid token burn demand. This “organic burn” is far more valuable than artificially driven buyback burns.

• ROI Analysis: $1 million buyback might only stabilize the price for a few days; $1 million in subsidies could bring in 10,000 long-term paying users, whose lifetime value (LTV) will contribute far more than $1 million.

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

Jupiter co-founder Siong Ong also initiated a discussion in the community about stopping buybacks, proposing to redirect $70 million toward “growth incentives.”

• Core Argument: During high inflation phases, buybacks are an inefficient capital allocation. Funds should be used to build moats, such as developing new features (e.g., JupUSD), incentivizing developers, or subsidizing user trading slippage.

• JupUSD’s Strategic Role: Jupiter launched a stablecoin JupUSD supported by BlackRock BUIDL fund. Using buyback funds to incentivize JupUSD liquidity and adoption could build a deeper moat for Jupiter ecosystem, with long-term benefits for JUP token value far exceeding short-term price support.

(# 4.3 Optimism )OP###: Contrarian Buyback

Interestingly, while Jupiter and Helium retreat, Optimism proposed in January 2026 a plan to use 50% of its superchain revenue to buy back OP tokens.

• Why contrarian? This reflects differences in project lifecycle stages. Optimism has moved past early-stage ecosystem growth via inflation subsidies; its superchain now generates substantial real revenue (Sequencer Fees).

• Strategic Intent: Optimism aims to shed the “useless governance token” label by establishing a “revenue-token” hard link through buybacks. When protocols have a solid moat and cash flow, and token valuation needs to shift from “market cap” to “P/E ratio,” buybacks become a reasonable tool.

( 5. Conclusions and Outlook: The New Paradigm of 2026

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

)# 5.1 Conclusions

1. Buybacks are not a panacea: For projects in high inflation (large unvested tokens), buybacks are ineffective and may even loot protocol treasuries, transferring valuable cash flows to exiting early profit-takers.
2. Stage determines strategy:
   • Growth stage: Funds should be used for user acquisition and network expansion. Buybacks then appear as “management lacking investment imagination.”
   • Mature stage: With strong cash flow and controlled inflation, buybacks or dividends can be used to reward holders and establish value anchors.

Regulatory developments: The passage of the CLARITY Act and the GENIUS Act enables more compliant management of “digital commodity” tokens. Future will see more cases like Aave, managing treasuries and supply within legal frameworks.

5.2 Investor Advice

When evaluating projects in 2026, do not buy just because they “announce buybacks.” Perform the following checks:

• Calculate NFER: Is the buyback amount greater than the future year’s unlock value?
• Review holder structure: Are long-term believers dominant, or are “mercenaries” controlling?
• Understand fund sources: Are buyback funds derived from genuine protocol revenue, or just from financing?

In 2026, the market will no longer reward simple “burn” narratives but will favor protocols that leverage cash flow to build real moats and ultimately achieve net deflation.