Token Buyback Frenzy: Spending Hundreds of Millions to Buy Back Your Own Coins—Is It Really Creating Value?

Original Author: Christina Comben (Cointelegraph Contributor, Magazine, September 4, 2026)

Original Compiled by: TechFlow

TechFlow Editor's Note: Crypto projects are pouring hundreds of millions of dollars into "buying back their own tokens." As of 2026, the total buyback scale has reached approximately $640 million, up about 17% year-over-year, with Hyperliquid and Pump.fun alone accounting for nearly 90% of that figure.

On the surface, buybacks (and burns) can create demand, shrink supply, and support token prices, while also giving holders a more tangible sense that "the protocol is making money." But on the flip side, every dollar spent buying tokens is a dollar not spent on hiring developers, expanding the business, or strengthening the balance sheet.

Drawing on the perspectives of 1inch, Bitwise, and Spark, this article argues that buybacks can support tokenomics, but they don't necessarily improve the underlying business, and they certainly can't save a protocol that was never sustainable in the first place. As tokens increasingly resemble stocks and regulators begin to ask where value actually comes from, perhaps the real question is: if the buyback stops, do you still have a reason to hold this token?

Crypto projects are spending hundreds of millions of dollars to buy back their own tokens. But are buybacks creating lasting value, or are they simply making tokens appear more valuable than they really are?

As the industry matures and increasingly borrows playbooks from traditional finance (TradiFi), crypto projects are beginning to emulate the behavior of publicly listed companies. The latest trend stirring up the crypto space is token buybacks: using revenue to repurchase the project's own tokens.

As of 2026, crypto projects have spent roughly $640 million on this endeavor, up about 17% from the same period last year—and more than an order of magnitude higher than the mere $366,000 spent in 2024. Of that total, Hyperliquid and Pump.fun alone account for nearly 90% of current expenditures.

So where is this sudden surge coming from?

Buybacks create demand for tokens, while burns reduce supply, making each remaining token more valuable. This dynamic puts upward pressure on token prices.

It also gives holders a more tangible connection to the economic activity of the underlying protocol. Orest Gavryliak, Chief Legal Officer at DEX aggregator 1inch, told Magazine:

"When projects implement revenue-backed buybacks and burns, they usually have one or two goals in mind: either reducing the circulating token supply, or demonstrating to the market the logic of investing in the protocol's revenue."

Gavryliak said that telling users "we bought back and burned tokens" is far more "straightforward" than explaining how governance works, how fees are set, or how the protocol is being utilized.

Why Crypto Projects Buy Themselves

You might wonder whether a project buying its own tokens is putting the cart before the horse. After all, projects typically sell tokens to raise funds and cover costs.

That's roughly true, but there's a key caveat. Using generated revenue to buy back tokens (then holding or burning them) creates an implicit link between the protocol's success and the token's value—something that has long been a pain point for crypto projects. As Max Shannon, Senior Research Associate at Bitwise Europe, explained:

"Buybacks and burns remain an effective means of returning value to token holders: they create sustained buy pressure for the token in the open market, directly tying the token's success to platform adoption."

For an industry that has spent the past few years chasing narratives or betting on the "greater fool theory," this represents a sea change. Those buying Fartcoin or Peanut the Squirrel weren't exactly drawn in by sound economic models.

Some protocols are far more aggressive about this than others. Hyperliquid, for instance, allocates 99% of its revenue to buying back and burning HYPE. Pump.fun, meanwhile, directs 50% of its revenue toward buybacks and burns, with $446.65 million worth of PUMP already removed from circulation.

Chart: HYPE Burns. Source: Hyperliquid

DeFi infrastructure protocol Spark offers a somewhat different model: according to co-founder and CEO Sam MacPherson, it has cumulatively purchased over 143 million SPK tokens through open-market buybacks funded by protocol surplus.

But these tokens aren't burned—they remain in Spark's treasury, used to reward long-term participants in the ecosystem. MacPherson told Magazine that the focus isn't simply on reducing supply:

"Token holders should participate in the protocol's long-term economic success, rather than receiving a dividend every time the protocol generates revenue."

He said buybacks allow Spark to establish this alignment of interests while "retaining flexibility over how and when the purchased SPK is ultimately deployed," making the token economically meaningful rather than "a simple dividend mechanism."

Token buybacks are also a highly tax-efficient way to return revenue to holders, as users don't have to shoulder a heavy tax burden from dividends or rewards.

Is Buying Tokens Really the Best Use of Money?

While the above logic sounds perfectly reasonable, the bigger question is: is buying your own tokens truly the best use of a project's funds?

That may not hold true in every scenario. MacPherson said:

"The question that should be asked is: what is the highest-value use of the next dollar of surplus?"

He noted that if a protocol can reinvest capital at attractive returns, that might be far more valuable than "distributing everything the moment revenue comes in."

Chart: PUMP Burns. Source: Pump.fun

Buybacks can support tokenomics, but they don't necessarily improve the underlying business.

Nor is there any ironclad guarantee that buybacks will translate into higher token prices. Pump.fun has been aggressively buying back and burning PUMP since July 2025, yet the token still sits roughly 50% below its September 2025 all-time high. UNI's gains following Uniswap's UNIfication proposal in November 2025 have also given back about half of their value.

Shannon noted that "many factors" contributed to these price movements, so they don't necessarily prove buybacks have failed, but:

"They prompt investors to debate whether these startup-like projects should reduce the share of revenue committed to buybacks and burns, and reinvest more back into the team and the project itself."

Investors should carefully distinguish between "buyback programs that boost token prices" and "successful business models."

A sustainable protocol generating real surplus might conclude that spending some money on buybacks is the optimal choice—but equally, a struggling project might simply be trying to use buybacks to prop up its price. MacPherson put it bluntly:

"A buyback won't make an unsustainable protocol sustainable."

When Tokens Begin to Resemble Stocks

Although token buybacks superficially resemble stock buyback programs, this doesn't mean tokens are becoming more and more like stocks.

Chart: UNI has fallen approximately 50% since commencing buybacks and burns. Source: Coingecko

Shareholders own a piece of the company and may enjoy voting rights, dividend rights, or claims on residual assets. Token holders, by contrast, typically don't have these equivalent legal rights, and Orest considers this distinction crucial. "This is a market mechanism, not a legally enforceable claim," he said.

MacPherson describes SPK as a form of "pseudo-equity" in an on-chain protocol. While the legal ownership structure of a traditional company doesn't exist, economically, Spark is "trying to create many of the same characteristics: participation in governance, long-term alignment, and a mechanism that allows those most loyal to the protocol to benefit from its success."

When Buybacks Start to Look Like Dividends

But as crypto begins to emulate TradFi buybacks, storm clouds may be gathering on the horizon—because regulators are pondering what these mechanisms actually mean.

Although the 2025 CLARITY (Clear and Legally Adaptive Rules for Innovation in Technology and Equity) Act remains a draft and shouldn't be treated as settled law, Gavryliak noted that its proposed framework highlights a key question: where does a token's value actually come from?

"If value derives from the network's inherent functionality, the asset looks like a commodity. But if value is built on the project team's efforts in delivery, marketing, or providing returns to token holders, then it's already a security. At the end of the day, don't dress a token in stock clothing and then expect it to still be treated as a commodity."

Ultimately, crypto investors want to know what's underneath a token: revenue, users, a sustainable economic model, and some credible mechanism through which the token can benefit from these fundamentals.

While buybacks might offer one solution, they could also be just another form of financial engineering—making tokens appear more valuable than they actually are without fixing the underlying problems. As Gavryliak put it:

"If the buyback stops, is there still a reason to hold this token? If the answer is no, then the problem runs deeper than tokenomics."