Buyback tokens are returning to the center of discussions in the crypto market, but this time the core question is: are they truly effective?
According to data from CoinGecko, in 2025, crypto protocols spent over $1.4 billion to buy back their own tokens. However, the prices of many tokens remain flat or have fallen sharply, raising new doubts about the true value of buyback programs.
Recent actions by major protocols further clarify this issue. Helium – a decentralized wireless network – has paused its buyback program after seeing no impact on the market. Jupiter, a DEX aggregator platform on Solana, is also reconsidering its strategy after spending over $70 million on token buybacks last year, even though JUP still trades significantly below previous peaks.
On the other hand, Optimism – the team behind an Ethereum Layer 2 network – is considering allocating 50% of revenue from Superchain to periodic OP buybacks if approved by governance. The contrast between new proposals and recent setbacks sets the stage for a closer examination: when does buyback make sense, when does it not, and what are better solutions?
Why Buyback Doesn’t Maintain Token Price
The main reason buyback fails to support token prices is that the scale of repurchases is too small compared to market selling pressure, according to experts.
Lex Sokolin, co-founder of Generative Ventures, believes that demand from buybacks is much lower than the amount being sold. If a project buys back $100 million worth of tokens annually but has a daily trading volume of $20 million, the impact is almost negligible. In many cases, buybacks are only a few hundred thousand dollars, while the market must absorb millions of dollars worth of tokens released from unlock schedules.
Rob Hadick from Dragonfly emphasizes the basic law of supply and demand: if selling exceeds buying, prices will fall regardless of buyback efforts. Amir Hajian of Keyrock points out that tokenomics is a significant obstacle, as dense unlock schedules and continuous issuance easily overshadow buyback demand.
Timing and implementation methods are also crucial. Boris Revsin from Tribe Capital notes that many projects buy tokens when prices and revenues are already high, rather than during downturns. Some programs do not sustainably reduce supply or lack consistency, making buybacks superficial and only causing short-term price increases.
Additionally, there are deeper structural issues: most tokens do not grant clear rights to protocol cash flows, nor do they have transparent revenue management mechanisms. Tokens do not guarantee dividends, lack legal requirements, and are missing metrics similar to corporate profits. Therefore, the link between protocol performance and token value is often indirect and faint.
In this context, buyback becomes one of the few visible ways to return value to holders, but it alone is insufficient to bridge the gap between protocol performance and token price.
When Does Buyback Truly Work
Experts generally agree that buyback is effective only when the protocol has a solid foundation: real users, stable revenue, and sufficient resources for continued growth.
Buyback is most effective when it reinforces existing demand rather than trying to replace it. Anirudh Pai from Robot Ventures suggests buyback should go hand-in-hand with product and ecosystem investments, not at the expense of them.
Scale and funding are key factors. Buyback only makes sense when it is large enough relative to the token’s valuation and funded from the protocol’s recurring revenue. Since tokens often do not have direct rights to cash flows, buyback is one of the few mechanisms linking protocol performance to holder value — but only when the scale is sufficient.
Implementation methods are equally important. Regular programs with clear, predictable rules tend to inspire more confidence than sporadic buyouts. Buybacks combined with actual supply reduction are viewed more favorably, as they reflect genuine demand rather than “financial engineering.”
Timing also matters. Buyback is more suitable after a project has passed its high-growth phase and no longer has many opportunities for outsized profits. For early-stage projects, small buybacks can serve as long-term signals rather than tools to push prices up.
In summary, buyback is most effective when it results from success, not as a tool to compensate for a lack of it.
When Buyback Should Not Be Used
Many experts warn that projects should avoid buyback if their balance sheets are weak or runway is short. Projects that have less than two years of operational buffer in a worst-case scenario should prioritize maintaining resources for product development and market expansion.
Buyback can backfire when the fundamentals are weak. If token demand is mainly speculative or buyback masks a lack of adoption, such programs can erode long-term trust. In volatile markets, poorly timed buybacks can even amplify losses and damage governance credibility.
Opportunity cost is a critical factor. If capital could generate higher returns through product, distribution, or ecosystem investments, buyback should be postponed. However, even strong growth does not guarantee that benefits will be reflected in the token price, due to lack of legal links and structural issues.
Some investment funds suggest that direct revenue sharing might be a clearer solution. Profit distribution provides a reason to hold tokens independent of price fluctuations, but it still faces legal and tax hurdles.
Market and macroeconomic conditions are also vital. Buybacks tend to be more effective when liquidity is low and valuations are weak, after the project has strengthened its balance sheet. Conversely, during bullish markets, buybacks should be carefully considered to avoid overpaying and depleting long-term reserves.
Future Outlook
Looking ahead to 2026, buyback is likely to continue, but with more discipline and selectivity. As more protocols achieve product–market fit and generate stable revenue, buyback will remain a successful tool linking protocol benefits with holder interests.
However, superficial buyback announcements lacking a solid foundation will struggle to generate positive reactions. Conversely, well-designed programs tied to sustainable revenue and transparent execution will stand out. Hybrid models combining buyback with revenue sharing, staking, or token burning are also expected to become more common.
Thạch Sanh
