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Digital asset groups have spent almost $640mn so far this year buying back their own tokens, as they turn to a strategy commonly used in equity markets to try to revive crypto prices during a prolonged market downturn.
The $638mn of repurchases compares with $545mn spent over the same period last year and just $366,000 for 2024 as a whole, according to figures from blockchain data group Allium Labs.
Perpetuals exchange Hyperliquid and memecoin-creating platform pump.fun are among the groups spending vast sums on purchasing their own tokens, together accounting for nearly 90 per cent of the buybacks.
The buybacks come during a tough period for the crypto market, as some investors ditch digital assets in favour of soaring AI-related stocks. Although prices bounced recently after the US Treasury’s surprise intervention in bond markets rattled faith in the dollar, bitcoin is still down around 38 per cent since its peak, while other popular tokens such as XRP and solana are down around 60 per cent.
There is an “optic incentive” for crypto groups to do buybacks to show confidence in their tokens, said Elton Shehdula, head of research at Allium Labs.
“Once they buy those tokens, they’re essentially reducing the supply, which is another lever of supporting the token price,” he added.
Listed companies in the US and UK have for decades regularly spent billions buying back their own stock as a way of supporting their share prices and boosting returns for existing shareholders.
However, buybacks of crypto tokens — which, unlike shares, typically have no economic or voting rights — have been rare until recently.
That is in part because during former chair Gary Gensler’s tenure at the US Securities and Exchange Commission, many executives were cautious about any actions that could make crypto look like a security, leaving them potentially open to action by the regulator.
But this has changed under the Trump administration as US regulators take a much friendlier stance towards crypto, which has helped make executives more comfortable about running token buyback programmes.
Popular perpetuals exchange Hyperliquid has led the charge. It spends 99 per cent of its revenue from trading fees on repurchasing its own HYPE token and has bought back and cancelled $1.3bn worth since it launched in December 2024. HYPE has surged 70 per cent over the past year, bucking the wider crypto downturn.
Matt Hougan, chief investment officer at crypto investor Bitwise Asset Management, said the “primary” reason for the token’s surge was Hyperliquid’s aggressive buybacks, which have given investors confidence that “a blockchain’s rising activity would flow through to the token”.
Another firm buying back its tokens is decentralised finance platform Sky Protocol, which has bought $26mn of them, according to Allium. According to co-founder Rune Christensen, it generated more than $400mn in revenues over the past year, and buybacks of its SKY tokens “ensure the holders driving decision-making are aligned with the long-term success of the protocol”. Holders of SKY tokens can vote on issues about the blockchain. SKY is up 5 per cent over the past year.
Crypto staking protocol Lido said in August it planned to run regular buybacks to tie its token’s price “more directly to the Lido protocol’s success” once certain conditions had been met, including making $40mn in annualised revenues. Its token has plunged 71 per cent over the past year and is trading near record lows.
As with equity market buybacks, there is uncertainty as to how big an impact repurchases have on token prices.
Decentralised exchange Jupiter has spent nearly $14mn on share buybacks so far this year, according to Allium, but its token price has fallen by 55 per cent over the past year. Chainlink, a platform that connects different blockchains, has also executed buybacks but its LINK token has halved in dollar value over the past year.
Internet connectivity platform Helium stopped its token buyback programme in February. “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,” said co-founder Amir Haleem at the time.
“Just because a project is doing buybacks doesn’t necessarily mean it’s a good project,” said Shehdula at Allium Labs, adding that he was “sceptical” that the buybacks would meaningfully lift prices.
Amir Hajian, researcher at crypto group Keyrock, said the era of crypto tokens surging on market hype has ended, as traders instead look at whether or not tokens are likely to give them any economic benefits.
“Tokenholders are looking at this from a very fundamental point of view whereas before tokens would go up a lot on hype . . . it’s become a market where not everything goes up at once.”
For instance, some groups are treating tokens more like traditional stocks by giving holders earnings similar to dividends as they try to distribute some value to investors.
Investors who hold the THORSwap token of decentralised exchange THORChain and stake them — lock up tokens on the blockchain in order to help secure and validate transactions — can receive 55 per cent of revenues, while a further 20 per cent is spent on token buybacks. But despite this, the token’s price has fallen by half over the past year.
