A buyback is a situation in which a project uses part of its revenue to buy back its own tokens on the open market. For holders, this sounds attractive: if a protocol earns money and directs it toward purchasing its own asset, additional demand appears. And if some of these tokens are then burned or removed from circulation for a long time, supply decreases. In theory, all of this should support the value of the token.
This is exactly why, in 2025–2026, buybacks became one of the most discussed topics in the crypto industry. They are launched by lending protocols, decentralized exchanges, derivatives platforms, and other DeFi projects. For some, this is a way to demonstrate the maturity of their business model; for others, it is an attempt to revive interest in the token; and for others still, it is almost a full-fledged analog of returning capital to investors.
Why crypto projects buy back their own tokens
In traditional business, share buybacks have long been a common practice. If a company earns enough money and believes its shares are undervalued, it may buy back some of its shares on the open market. This reduces the available supply and is often perceived by investors as a signal of confidence in the business's future.
In the crypto industry, the logic is similar, but the structure is different. Here, decisions are often made not by a board of directors, but by a DAO — a decentralized autonomous organization. The community votes on how much money to allocate to buybacks, how often to make purchases, and what to do with the tokens afterward.
The main idea is simple: if a project truly generates revenue, it can turn that revenue into continuous demand for its own digital asset.
What happens to tokens after a buyback
Burn and forget
The most radical option is burning tokens. The project buys assets on the market and then sends them to a special address from which they cannot be returned. This permanently removes the tokens from circulation.
For the market, this is the clearest signal: supply is reduced irreversibly. The fewer tokens are available, the stronger the scarcity effect may be — provided, of course, that demand remains.
One notable example is Sky, formerly MakerDAO. Since February 2025, the project’s DAO has been directing part of the protocol surplus every day toward buying back and destroying SKY tokens. Initially, around $1 million in USDSstablecoins per day was planned for this purpose.
Put them into the treasury
Another approach is not to burn the repurchased tokens, but to send them to the protocol treasury. In this case, the assets do not disappear, but they leave free circulation and remain under the control of the DAO.
This is how Aave operates. The protocol regularly buys AAVE on the market, and the repurchased tokens replenish the treasury. According to Token Logic, the DAO has already accumulated around 70,000 AAVE.
This model has a strong advantage — flexibility. The community can later decide how to use these tokens: direct them toward development, staking, liquidity support, or other initiatives. But there is also a weak point: since the tokens have not been destroyed, the market understands that they may theoretically return to circulation.
Stake them and strengthen the network
There is also a more technological model: the project buys back tokens and then sends them into staking*. This way, the asset not only leaves the market but also begins working to ensure the security of the network.
* Staking means locking up for a reward. In the cryptocurrency sphere, staking refers to locking tokens or coins in a network or protocol to support its operations, such as validating transactions, securing the blockchain, participating in governance, or maintaining validator operations. In return, a staking participant may receive a reward.
This is exactly the mechanism used by dYdX. In the first quarter of 2025, the protocol launched a program under which 25% of net fee revenue is directed each month toward purchasing DYDX. After that, all repurchased tokens are staked.
The more tokens participate in staking, the more resilient the network’s validator infrastructure becomes.
Hyperliquid and the almost industrial scale of buybacks
The loudest example of recent years is Hyperliquid. The platform has an Assistance Fund mechanism that automatically directs a significant portion of fee revenue toward purchasing the HYPE token.
According to various estimates, 97–99% of the platform’s fee income is used to buy back HYPE.
By mid-2025, the fund had accumulated more than 20 million HYPE — approximately $386 million, or around 6.2% of the circulating supply. By the first quarter of 2026, the fund’s volume had grown to roughly 45.65 million HYPE, worth around $3.19 billion.
The scale is also impressive for quarterly buybacks: around $317 million in the third quarter of 2025, $255 million in the fourth quarter of 2025, and $192 million in the first quarter of 2026.
According to Tokenomist estimates, since January 2026, several projects have managed to buy back more tokens than entered circulation over the same period due to issuance or unlocks. These include Meteora, Pump. Fun, GMX, Raydium, Metaplex, HYPE, LIT, and AAVE.
In terms of relative impact, Meteora stood out in particular: the buyback volume amounted to around 71% of its January free float*. In absolute terms, Hyperliquid was the leader, buying back tokens worth approximately $283 million while reducing supply by 11%.
* Free float is the share of an asset in free circulation. In a financial and cryptocurrency context, the term refers to the part of an asset that is freely circulating on the market and available for purchase or sale.
According to AInvest, in 2025, crypto projects collectively allocated more than $880 million to buybacks. For the digital asset industry, this is a significant amount. But compared with the traditional market, where public companies spent more than $1 trillion on share buybacks during the same period, cryptocurrency programs still look more like the early stage of a major trend.
Why a buyback is not a magic growth button
A buyback does not create value by itself. It can strengthen an already functioning economy, but it cannot replace a strong product, a growing user base, and sustainable revenue.
A study by Bill Hsu, which examined 10 large tokens with active buyback programs, showed that only 3 of them — AAVE, HYPE, and SKY — outperformed Bitcoin during the period the programs operated. The others did not show positive excess returns.
This is an important signal for the market. The existence of a buyback does not yet mean that a token will grow. If a project has a weak business model, declining activity, or unconvincing economics, a repurchase may simply be an expensive way to maintain the illusion of demand.
When issuance is stronger than the buyback
The main enemy of a buyback is new issuance and token unlocks. If a project buys back assets worth millions of dollars but, at the same time, even larger volumes of unlocked coins enter the market, the effect is quickly diluted.
To assess this, the coverage ratio is used — the ratio of the buyback volume to the volume of new issuance or unlocks over the same period.
For Hyperliquid, some estimates put this figure at around 10x in favor of unlocks. In other words, for every 10 repurchased tokens, around 100 new ones could enter the market.
For some projects, including Ethena and Optimism, the issuance-to-buybacks ratio exceeded 13x. That is why critics call such programs a “race to the bottom”: the project spends funds on buybacks but cannot compensate for the dilution quickly enough.
Transparency decides everything
Ideally, a project should show the source of funds, addresses, purchase volumes, and the further fate of the tokens. Then the community can verify that the buyback actually works and is not just a press release.
In practice, however, some programs are financed through treasury operations or over-the-counter transactions, the details of which remain closed. This reduces trust.
Therefore, for the market, what matters increasingly is not the mere fact of a buyback, but its quality: the source of funds, regularity, transparency, and the ratio to issuance.
Why holders do not always receive a direct benefit
Buybacks have another feature: token holders usually do not receive direct payments. Even if a project directs millions of dollars toward buybacks, these funds are not distributed among users as dividends.
In the case of Hyperliquid, for example, the repurchased tokens remain in the internal fund.
That is why cryptocurrency buybacks differ from classic dividend models. Their effect is usually indirect: less free supply, higher potential demand, and stronger tokenomics. But there is no guaranteed profit for the holder here.
The regulatory question
The more buybacks resemble the return of profit to holders, the greater the interest from regulators. If a protocol directs revenue toward supporting the token, such a mechanism may be interpreted as an element of an investment scheme.
So far, there are no unified rules for cryptocurrency buyback programs. But regulatory uncertainty has already become one of the risk factors. This is especially true for projects that publicly link token buybacks to protocol revenue and holder expectations.
How a buyback differs from BNB burning
At first glance, the goal looks similar: to reduce supply and support the asset’s economy. But the architecture is completely different.
Binance does not buy back BNB on the open market in real time using current fees. Instead, it uses the Auto-Burn system — automatic burning. It consists of two parts.
The first is the burning of part of the fees in the BNB Smart Chain network. The second is quarterly BNB burning based on an open formula that takes into account the average price of the coin and the number of blocks produced by the network during the quarter.
In April 2026, the 35th quarterly BNB burn took place. Around 2.14 million BNB were removed from circulation, worth approximately $1.32 billion. By that point, more than 62 million BNB had been destroyed in total — over 30% of the initial issuance of 200 million coins. The final goal of the program is to reduce supply to 100 million BNB.
The key difference is that BNB burning is formalized and irreversible. It does not depend on a one-time decision to direct part of the profit toward a buyback, nor does it imply that the destroyed tokens will ever return to circulation.
Buyback vs. burning: what is the difference?
A buyback is more flexible. A project can buy tokens, leave them in the treasury, stake them, use them for ecosystem programs, or make a new decision later. This is convenient for capital management, but it leaves room for uncertainty.
Burning, by contrast, is strict and final. If tokens are destroyed, they will no longer return to the market. For holders, this is simpler and clearer: supply really does decrease.
There is also a difference in predictability. BNB Auto-Burn works according to a formula that can be checked in advance. Buybacks more often depend on revenue, DAO votes, and market conditions. Therefore, their volumes can change sharply.
Finally, the regulatory profile differs. Formula-based burning appears to be a technical mechanism for supply management. A buyback, especially if it is financed with profits, looks more like a return of capital to investors and may raise more questions from regulators.