As token buybacks gain popularity in cryptocurrencies, Amir Hajian, head of research at market-making firm Keyrock, warns in a new report that every dollar spent on token buybacks is a dollar diverted from growth and innovation, underscoring the hidden opportunity cost behind the display of trust.
Token buybacks involve blockchain projects buying back their own tokens on the open market, similar to share buybacks. The strategy absorbs circulating supply from the market, creating scarcity and potentially increasing the value of the token to signal confidence to investors.
The rise in token buybacks marks a turning point in how cryptocurrencies define maturity, Hajian argues in the report shared with CoinDesk, writing that what began as an effort to demonstrate that protocols could return value like companies has become a stress test of their financial realism. The key point is whether protocols can repurchase with the restraint of a central bank rather than the nervous reflexes of a bull market.
Much of this buyback capital comes from treasuries rather than recurring revenue, highlighting how quickly the search for legitimacy can exhaust future runway.
With clearer rules in the US for cryptocurrencies and protocols finally generating consistent fee revenue, token buybacks have become the preferred way to tie revenue to holder value.
Hajian finds that the protocol’s payments to token holders have increased more than 400% since 2024, reaching almost $800 million in the third quarter of 2025.
Across the 12 revenue sharing protocols studied, teams returned an average of 64% of total revenue to holders, much more than traditional DAOs, which reinvest roughly three-quarters of spending on growth and development.
That tilt toward distributions over reinvestment, Hajian writes, has forced protocols to confront the limits on Treasury one-time spending. As markets mature and revenues normalize, projects can no longer afford buybacks that consider capital infinite or time irrelevant.
In response, some teams are reconsidering how and when security 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, income-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 appear undervalued and reducing them when prices soar.
Options-based structures go a step further, allowing protocols to sell covered puts and earn premium income while committing to future purchase levels, a design that generates income even when no buyback occurs.
Hajian argues that these models together reflect a mature approach to tokenomics and writes that they are healthy for treasury management as they align buybacks with real market conditions.
The report also warns that the quality of execution remains an underestimated risk.
Most projects use buy orders that draw liquidity from scarce order books, exaggerating price swings once buying stops. Calibrating buybacks to organic volume and leaning on manufacturer orders, Hajian writes, would allow protocols to add liquidity rather than consume it.
So when should token buybacks happen?
A protocol should only initiate buybacks once its revenue is 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: revenue is stable, market liquidity is deep, and protocol valuation has reached levels where capital returns make economic rather than promotional sense.
In contrast, newer teams often implement buybacks too early to attract users or attention, confusing visibility with value. These premature buybacks deplete reserves needed to fund products, growth and R&D, Hajian writes.
It could simply be that the real test is not the presence of a buyback policy but the discipline to wait until the fundamentals justify it. Buybacks are not proof of success, but rather a measure of whether cryptocurrencies can evolve from pledging to profit management.
