Why does buyback not create value? Aave team members' candid remarks expose the self-deception of crypto projects

Aave Labs team member Kolten recently shared a viewpoint on social media, directly addressing a common misconception in crypto projects: token buybacks do not create value by themselves and should be viewed as a supplementary measure rather than a core strategy. This perspective may seem simple, but it touches on many crypto projects’ obsession with “tokenomics.”

What is the true role of buybacks

Kolten’s core argument is straightforward: buybacks can signal confidence and reduce token circulation, but these are superficial effects. Buybacks themselves do not generate any real value.

He contrasted this with Apple’s strategy, which is quite enlightening. What does Apple do? Prioritize investing in its own business, and only conduct buybacks when cash reserves are sufficient and the stock is considered the best investment option. This reflects a fundamental principle: competitive business advantages are the true source of value.

What truly drives prices

Kolten pointed out that the main drivers of asset prices are three factors: adoption rate, market dominance, and compelling narratives. All three point in the same direction—the value of the product itself and market recognition, rather than the circulating supply or buyback amounts of tokens.

What does this imply for crypto projects? Simply put, if your product is unused, market dominance is weak, and your story is poorly told, no amount of buybacks can change the situation.

Why buyback effects weaken

Another real-world dilemma is that when new supply exceeds buyback volume, the effectiveness of buybacks diminishes further. This means that if a project lacks growth momentum and continuously produces new token supply, then more buybacks are just futile efforts.

Common misconceptions in crypto projects

Kolten’s other observation hits hard: many crypto companies focus excessively on native crypto buyers and ignore that 95% of potential investors are not concerned with tokenomics at all. This number may be an estimate, but it reflects an accurate reality.

What most investors truly care about

Most buyers have never heard of crypto Twitter; they care more about product features and easy-to-understand stories. In other words, retail investors focus on what the project can do, not how complex the token supply curve is.

This should serve as a wake-up call for projects that spend significant effort optimizing token economics. Your carefully designed deflation mechanisms, liquidity mining, and token release curves may be completely unappealing to 95% of potential users.

The same-direction trading dilemma in crypto assets

Kolten also pointed out a characteristic of the current market: most crypto assets still exhibit correlated trading behavior. What does this mean? Most projects’ price movements follow the overall market (Bitcoin and Ethereum), making independent valuation difficult. In such cases, buybacks are unlikely to have a significant impact.

Real-world case — Aave’s new approach

Interestingly, against the backdrop of Kolten’s remarks, Aave Labs recently proposed a new strategy. According to the latest news, Aave founder Stani Kulechov committed to sharing a portion of the protocol’s external-generated revenue with AAVE token holders, rather than simply conducting buybacks.

This move exemplifies the principle Kolten mentioned: prioritize doing a good job with the core business (Aave’s lending protocol and new products), then share the actual revenue generated with holders. This is more convincing than just buybacks because it demonstrates real cash flow and business results.

Summary

Kolten’s viewpoint can be summarized with a few key points:

• Buybacks are a result, not a cause. True value is created by adoption, market position, and product competitiveness.
• Crypto projects are overly obsessed with tokenomics details, neglecting the real needs of most investors.
• The current market’s correlated trading behavior makes it difficult for individual projects to achieve independent valuation through buybacks.
• The correct priority should be: first build a solid product and business, then focus on token management.

This serves as a reminder to the entire crypto industry: don’t get trapped by the concept of “tokenomics.” Ultimately, what determines a project’s value is whether it can create real value for users, which requires product innovation and market expansion, not sophisticated token design.