Bitwise CIO Says Token Buybacks and Burns Could More Than Double Crypto Valuations

Crypto valuations could more than double from current levels as more protocols use revenue to buy back and burn tokens, according to Bitwise Chief Investment Officer Matt Hougan.

Hougan told Cointelegraph in an Aug. 13 report that the crypto market outside Bitcoin is shifting toward a revenue-based model in which network activity translates into token value. Some assets remain undervalued because the market has yet to fully price in that shift, he said.

He cited Hyperliquid, Uniswap, Aave, Pump.fun and Raydium as leading examples of projects using fees for token buybacks and burns. Hougan expects similar revenue-return structures to spread across decentralized finance applications and Layer 1 networks over the next 12 to 24 months.

He also flagged risks for investors. Unlike shareholders, token holders have no legal claim on cash flow, and tokenomics set by communities can change at any time.

Hougan also detailed how individual protocols are returning revenue. Hyperliquid allocated about 99% of more than $800 million in revenue last year to buybacks and burns. In the second quarter of this year, it used $141 million of $169 million in revenue for burns. Uniswap introduced a structure on Dec. 22 through its "UNIfication" overhaul that uses protocol fees to fund token burns. Aave DAO bought back more than 205,000 AAVE over 10 months through its own repurchase program, and Aave founder Stani Kulechov said 100% of revenue from the Aave protocol and GHO accrues to the AAVE token.

Hougan said the trend is tied to changes in the US regulatory environment. Projects had long avoided revenue-sharing features because of concerns about violating securities laws, but adoption of those structures has accelerated as regulatory guidance has become clearer.