As token buybacks gain popularity in crypto, Amir Hajian, head of research at market making firm Keyrock, warns in a new report that every dollar spent buying back tokens is a dollar derived from growth and innovation, underscoring the hidden opportunity costs behind the trust statement.
Token buybacks involve blockchain projects repurchasing their own tokens from the open market, similar to stock buybacks. The strategy siphons circulating supply from the market, creating scarcity and potentially increasing the token’s value to signal confidence to investors.
The increase in token buybacks marks a turning point in how crypto defines maturity, Hajian argues in the report shared with CoinDesk, writing that what began as an attempt to prove that protocols could return value as businesses has become a stress test of their economic realism. The key point is whether protocols can be repurchased with the restraint of a central bank rather than with the shaky reflexes of a bull market.
Much of this capital for buybacks comes from government bonds rather than recurring revenues, revealing how quickly the pursuit of legitimacy can drain the runway of the future.
With clearer regulations forming in the US for crypto and protocols that finally generate consistent fee income, token buybacks have emerged as the preferred way to link revenue to owner value.
Hajian notes that protocol payouts to token holders have increased more than 400% since 2024, reaching nearly $800 million in the third quarter of 2025.
Across 12 revenue sharing protocols studied, teams returned an average of 64% of total revenue to holders, far higher than traditional DAOs, which reinvest about three-quarters of expenses into growth and development.
This tilt toward distributions over reinvestment, Hajian writes, has forced protocols to confront the limits of one-time spending on the treasury. As markets mature and revenues normalize, projects can no longer afford buybacks that treat capital as infinite or timing as irrelevant.
In response, some teams are rethinking how and when value should return to holders, tying buybacks to valuation metrics, cash flow strength and market conditions rather than fixed percentages.
Hajian points to the rise of trigger-based and option-based models as early signs of this shift, designed to make buybacks countercyclical, revenue-sensitive and sustainable beyond the next bull cycle.
Trigger-based systems tie spending to measurable fundamentals, such as valuation multiples or fully diluted value bands, increasing allocations when tokens look undervalued and scaling back when prices heat up.
Options-based structures go a step further and allow protocols to sell covered puts and earn premium income while committing to future purchase levels, a design that generates revenue even when no repurchase occurs.
Hajian argues that these models together reflect a maturing approach to tokenomics, and writes that they are sound for financial management as they align buybacks with real market conditions.
The report also warns that execution quality remains an underestimated risk.
Most projects use receiver orders that draw liquidity from thin order books and exaggerate price swings when buying stops. Calibrating buybacks to organic volume and leaning on producer orders, Hajian writes, would allow protocols to add liquidity rather than consume it.
So when will token buybacks take place?
A protocol should only initiate buybacks when its revenues are recurring, its treasury can cover at least two years of operations, and its valuation multiples suggest the token is trading below fundamentals, Hajian argues.
Mature projects tend to launch buybacks when financial strength is evident: revenues are stable, market liquidity is deep, and the protocol’s valuation has reached levels where return on capital makes economic sense rather than promotional sense.
In contrast, newer teams often implement buybacks too early to attract users or attention, mistaking visibility for value. These premature buybacks drain the reserves needed to fund product, growth and R&D, Hajian writes.
It may just be that the real test is not the presence of a buyback policy, but the discipline to wait until the fundamentals justify one. Buybacks are not proof of success, but rather a measure of whether crypto can evolve from distributing promises to managing profits.
