How to spend protocol revenue? Blockworks: Prioritize growth, forgo buybacks

Blockworks’ head of consulting, David, recently shared his views on X, believing that crypto protocols should prioritize investing revenue into business growth rather than token buybacks. This stance reflects a deep consideration of the industry’s competitive landscape and the long-term development of protocols. David pointed out that no protocol is immune to competition; merely maintaining the status quo is far from enough. Protocols need to continuously invest in expansion and customer acquisition to build a genuine long-term moat.

Why Oppose Token Buybacks

David’s viewpoint is based on a core judgment: the current crypto industry is highly competitive, and even leading protocols like Hyperliquid face significant pressure. In his analysis, he highlighted that token buybacks often send two unhealthy signals:

• The protocol lacks a sense of competitive pressure and is overly confident in its market position
• The protocol believes revenue cannot be used elsewhere to solidify long-term advantages

Both signals reflect strategic passivity and shortsightedness. In contrast, investing revenue into vertical expansion (deepening existing features), horizontal expansion (exploring new markets), and customer acquisition is the correct approach to counter competition and build a moat.

David’s Historical Stance

This is not the first time David has expressed opinions on tokenomics. He and the Blockworks Advisory team have previously published multiple articles opposing token buybacks, including:

• Being the sole opponent in the Aave tokenomics proposal
• Holding the same opposition to Jit’s tokenomics model
• Consistently advocating for capital and revenue to be allocated toward growth rather than shareholder returns

This consistent stance indicates that his views are not temporary but rooted in a profound understanding of industry development patterns.

Industry Context: A New Perspective on Financial Strategies

This viewpoint is not isolated. According to the latest news, Michael Ippolito, co-founder of Blockworks, mentioned in a 2026 industry forecast that the discussion around “revenue narratives” is shifting from mere growth to “durability” and “quality.” This suggests the entire industry is re-evaluating protocols’ financial strategies—focusing less on revenue itself and more on whether revenue can support long-term competitiveness.

David’s perspective resonates with this trend. Under this new framework, revenue allocation is no longer just a financial decision but a strategic choice, reflecting an understanding of the essence of industry competition and long-term development.

Future Outlook

Based on this logic, several development directions can be anticipated:

• More protocols may revisit their buyback policies, shifting toward more aggressive growth investments
• Investors and communities will scrutinize protocols’ financial decisions more strictly, demanding clear competitive strategies
• Financial transparency of protocols will improve, with specific revenue uses becoming a focus of governance and evaluation
• Protocols that persist with buybacks may face market and community skepticism

Summary

David’s viewpoint touches on a fundamental issue: how should protocols view their competitive position and long-term development? His answer is clear—do not be complacent with the status quo; continuous investment in expansion and growth is essential. This is not just a financial strategy issue but a recognition of the nature of industry competition. In a rapidly evolving industry, revenue capacity alone is insufficient; the key is how to use that revenue effectively to build hard-to-copy competitive advantages. From this perspective, token buybacks appear to be a strategy aimed at short-term market performance, which is precisely what David opposes.