In my previous post we looked at when buybacks work and when they don’t. The analysis assumes something that may not be true for most tokens: that there is a functioning market on the other side of the trade. Before asking whether a protocol should return capital, we should first ask who the marginal buyer is.
In traditional equity markets, the bid is mechanical. A company like Apple can issue shares through employee compensation because index funds, pension allocators, and 401(k) contributions absorb supply on schedule, regardless of sentiment.
In crypto, the buy side is thin and the asset class is risky. When sentiment turns, the entire bid, retail traders, the small pool of crypto native funds and a handful of family offices take risk off of the table. The sell side, by contrast, is enormous and obligated. Venture investors sitting on 50–100x paper gains hold only because they are still vesting. The moment tokens unlock, many have a fiduciary obligation to return capital to their LPs. They are scheduled sellers.
A protocol generating $50 million in annual fees sounds impressive until you realize it has $500 million in scheduled unlocks over the same period, and the only buyers are retail speculators chasing narratives. In 2025, scheduled token emissions in crypto exceeded $97 billion. The entire buy side is discretionary, and none of it operates on a mandate.
Wormhole is a protocol that secures cross-chain infrastructure for institutional partners including Hamilton Lane and Securitize, and its usage has grown steadily. The token lost 88% in value over the past year. The team responded with a revenue-backed reserve, a staking mechanism targeting 4% base yield, and replacing annual cliff unlocks with bi-weekly linear releases. The unlock schedule overwhelmed all of it.
Most protocols launched with 10–20% of supply in circulation. Many have annual emissions exceeding 10% of total supply. For a buyback to matter, the demand it generates has to exceed the steady liquidation of venture positions and insider unlocks. Almost nowhere in crypto does this condition hold.
The 2021 vintage of venture deals, over $33 billion deployed into crypto startups, is now in its third and fourth year of vesting. Those tokens are arriving on the market at the weakest point for discretionary demand. The overhang clears when the unlock schedules complete and the marginal seller transitions from a venture fund distributing to LPs to an organic holder making a voluntary decision.
Repricing requires active intervention in the supply side: accelerating burns, restructuring emissions schedules, converting inflationary tokenomics to deflationary ones, and forcing the governance decisions that the market cannot deliver passively. The protocols that are able to accelerate that transition are the most attractive to investors today, and will compound in the long-term.