Every protocol follows a lifecycle with clear objectives, acquire users, deepen liquidity, ship product, and expand the addressable market. Capital deployed on growth and user acquisition at this stage can generate multiples in future fee revenue. However, one dollar spent on buybacks at this early stage is gone, absorbed into a token price that remains hostage to market sentiment, unlock schedules, and the broader cycle.
Token prices are driven by supply-demand dynamics that often have little to do with protocol fundamentals. This piece focuses on one narrow question within that reality: when a protocol does choose to allocate capital to buybacks, under what conditions does that actually work? Future installments will address the broader structural forces that determine whether fundamentals translate to price at all.
Buybacks are a common trend in recent project launches, but they are often implemented before they are optimal. We are starting to see some projects reverse course, Helium for example had buybacks, but is now reinvesting revenue into growth. On January 2nd, 2026, founder Amir Haleem posted on X:
"An update on HNT buybacks: the market doesn't seem to care about projects buying their tokens back off the market, so we are going to stop wasting our money under the current conditions. Helium + Mobile generated $3.4M in October alone and I'd rather we use that money to grow the business than pour it into a hole."
Haleem went on to say the team is fully focused on growing Helium Mobile subscribers, expanding the network’s installed base, and increasing carrier offload usage. All compounding investments in the growth phase of the network. The next day, Jupiter co-founder Siong Ong followed suit, questioning the program publicly:
"What do you all think if we stop the JUP buyback? We spent more than 70m on buyback last year and the price obviously didn't move much. We can use the 70m to give out for growth incentives for existing and new users. Should we do it?"
Jupiter had committed half its protocol fee revenue to buybacks, spending over $70 million in 2025. During that period, JUP fell 89% from its peak. The buybacks absorbed roughly 6% of unlocked supply against $1.2 billion in scheduled unlocks. This is the same dynamic that has plagued equity markets for decades. As pointed out to me by Meltem who reviewed this piece, Snapchat is the poster child: over the last ten years, its executives have paid themselves close to $10 billion in stock-based compensation, a figure that now exceeds the company’s entire market cap. Share buybacks in that context aren’t returning value, they’re bailing water out of a boat with a hole in the hull. Jupiter’s buybacks operated under the same structural impossibility, token emissions and unlocks were creating supply far faster than $70 million could absorb it.
Helium and Jupiter are still in their growth phase, they should be spending resources acquiring users, deepening liquidity and shipping product. The signal a buyback sends is we have no higher-return use for this capital. A growing protocol should never be sending that signal.
Apple didn’t buy back shares in its garage. It waited until it was generating more free cash flow than it could deploy into R&D, capex, and M&A combined. The same logic applies in crypto. Buybacks belong at the point where product-market fit is proven, revenue is durable, and growth spend has hit diminishing returns.
Hyperliquid meets all three conditions. The protocol channels 97% of trading fees into its Assistance Fund, which continuously repurchases HYPE on-chain. Since the program launched in late 2024, Hyperliquid has bought back over 40.5 million HYPE all of which are burned and permanently removed from circulation. By October 2025, the fund had allocated over $644 million to repurchases, 46% of all token buyback spending across crypto that year, more than the next nine largest programs combined.
But the buyback isn’t the reason this works. Hyperliquid never took venture capital and never ran a traditional token sale. There is no massive unlock overhang from early investors, the only scheduled supply comes from team allocations, a fraction of what protocols with VC rounds and public sales face. Revenue comes from real trading activity, not subsidized volume. The buyback is funded from surplus, not diverted from growth capital. And the tokens are burned rather than locked, permanently reducing supply instead of pushing the overhang forward. The structural conditions were met before the first dollar was spent on repurchases. Most protocols skip that step entirely.
Jupiter failed on all three counts. Its buybacks were funded by diverting protocol fees: every dollar supporting the token was a dollar not spent on product, incentives, or ecosystem growth. And Jupiter locked its repurchased tokens for three years instead of burning them, pushing the supply risk forward rather than eliminating it.
Aerodrome takes a different approach. Rather than running a constant-rate buyback, its Public Goods Fund operates what it calls a “programmatic market-aware buyback”. The Momentum Fund builds reserves during strong markets and deploys buyback-and-burns when sentiment cools, acquiring tokens when they’re cheapest. The bought-back AERO is max-locked for four years as veAERO, deepening the protocol’s governance power and reinforcing the flywheel that directs emissions, captures fees, and coordinates liquidity. Aerodrome has crossed a specific threshold: fees flowing to locked veAERO holders and token burns now exceed the cost of rewards and emissions to LPs. The protocol is net-deflationary in real terms.
Hyperliquid shows that buybacks work when revenue overwhelms emissions and tokens are burned. Aerodrome shows that buybacks can also work when they are conditionally deployed based on market pricing rather than executed mechanically regardless of conditions. Both spent capital from surplus. Jupiter spent $70 million from operating revenue while $1.2 billion in unlocks flooded the market.
The lesson is not “don’t do buybacks”. The lesson is that buybacks are the last thing a protocol should implement, not the first. They belong at the end of the maturation cycle, when product-market fit is proven, revenue is durable, growth spend has diminishing returns, and there is genuine excess capital with no higher-return deployment. Implementing them before that point is not just ineffective, it actively destroys value by starving the protocol of growth capital during the phase where capital compounds most aggressively.
For investors, premature buybacks are at best neutral and at worst a red flag, not a bullish signal. When a protocol in its growth phase announces a buyback program, the implicit message is: we cannot find a better use for this capital than buying our own token. That is either a failure of imagination or an attempt to prop up a price that the team knows is disconnected from fundamentals. Either way, it signals that the protocol may have peaked in ambition before it peaked in value.
The protocols that will compound the most over the next cycle are the ones disciplined enough to reinvest during the growth phase and patient enough to return capital only when the growth phase is genuinely behind them.