Crypto Projects Allocate Over $1.4 Billion to Token Buybacks in 2025

Executive Summary

Crypto projects have dramatically ramped up token buyback initiatives in 2025, collectively spending over $1.4 billion. This move aims to reduce circulating supply and enhance token value, yet market reaction and long-term efficacy remain subjects of ongoing debate.

The Event in Detail

Token buybacks by crypto projects have exceeded $1.40 billion in 2025. A significant portion of this activity, 92%, originates from the top 10 projects by expenditure. Hyperliquid, a decentralized perp exchange protocol, has spearheaded this trend, allocating over $644.64 million through its Assistance Fund. This amount accounts for 46.0% of all token buyback spending this year, with at least 21.36 million HYPE tokens repurchased, representing 2.1% of its total supply, at an average price of approximately $30.18.

LayerZero follows as the second-largest spender, having executed a one-time $150 million buyback in September to repurchase 5.0% of its total ZRO supply from early investors. This transaction occurred at an average price of $3.00 per token. Pump.fun has committed $138.17 million to repurchasing PUMP tokens since July, accumulating 3.0% of its total supply at an average price of $0.0046. Raydium, a Solana-based decentralized exchange, has utilized $100.35 million in a buyback-and-burn program and has cumulatively spent approximately $196 million to repurchase 71 million RAY tokens, equivalent to about 26.4% of its circulating supply as of late August 2025.

In terms of the highest proportion of supply repurchased, decentralized exchange GMX leads, having bought back 12.9% of its total supply by spending $20.86 million to acquire 1.33 million tokens year-to-date. Solana launchpad Metaplex has repurchased 6.5% of its MPLX supply using $13.78 million funded by half of its protocol revenue. Sky Protocol's programmatic buybacks have accumulated 5.4% of its total supply, spending $78.82 million from surplus revenue.

Funding mechanisms vary among projects. Hyperliquid, for instance, allocates approximately 97% of its trading fees to automatically buy back HYPE tokens via an on-chain Assistance Fund. Other projects, like Jupiter, allocate a percentage of swap fees. Treasury-funded buybacks are also notable, with Aave's community approving weekly $1 million buybacks of AAVE using surplus treasury funds, and Orca utilizing $10 million of treasury funds for its buyback-and-burn program.

Market Implications

These extensive buyback programs are largely interpreted as strategies to reduce circulating supply, thereby increasing token scarcity and potentially bolstering token valuations. The influx of capital into buybacks addresses earlier criticisms regarding tokenomics models characterized by low float and high fully diluted valuations (FDV). Proponents suggest that sustained buybacks can lead to healthier tokenomics and more stable value accrual within the ecosystem. Short-term market reactions have varied; some projects, including Aave and Orca, experienced notable price surges post-announcement. However, about one-third of projects saw less than a 10% increase, which analysts attribute to broader market downturns or the underlying fundamentals of the projects themselves.

Expert Commentary

There is an ongoing debate within the crypto community regarding the long-term effectiveness of token buyback mechanisms. Supporters view buybacks as a means of confidence-building and optimizing token economies. They argue that these programs align incentives for long-term holders and demonstrate a project's commitment to value creation. Critics, however, contend that buybacks can potentially mask underlying growth deficiencies or serve as a form of exit liquidity for early investors. Analysts emphasize that sustainable value ultimately depends on robust revenue growth, continuous innovation, and strong project fundamentals rather than short-term price manipulation through repurchases. An emerging alternative, "buyback and make," proposes reinvesting repurchased tokens into the ecosystem to fund strategic initiatives, stimulate adoption, and create long-term value, moving beyond simple supply reduction.

Broader Context

The surge in token buybacks in 2025 reflects a confluence of factors, including increasing protocol profitability, greater governance maturity, and evolving market psychology across the Web3 space. As more decentralized protocols achieve sustainable revenue, they are channeling earnings into token repurchases to reinforce long-term value and foster community trust. This trend indicates a maturing market strategy where projects aim to reward long-term users and create positive feedback loops. While buybacks can provide short-term price support and confidence, their sustained success hinges on transparent execution, robust funding sources, clear alignment with token utility, and overall ecosystem growth. The debate highlights the continuous evolution of tokenomics models as the industry seeks to optimize value distribution and incentivize participation.