Crypto projects spend $640 million on token buybacks, but the strategy faces scrutiny
Bitcoin ETFs pull in $1 billion in three days
Crypto projects are spending hundreds of millions buying their own tokens, a practice known as buybacks. In 2026, projects have spent about $640 million on this, which is up 17% from the same period last year and far more than the $366,000 spent in 2024. Hyperliquid and Pump.fun make up almost 90% of that spending.
The trend shows crypto is copying public companies, which buy back their own shares to support stock prices. In crypto, buying back a token creates demand for it. When combined with "burns"—permanently removing tokens from circulation—it can make the remaining tokens scarcer and push prices up.
Key numbers behind the boom
- Crypto buybacks total roughly $640 million in 2026, up 17% year over year.
- 2024 saw only $366,000 spent on buybacks.
- Hyperliquid and Pump.fun account for nearly 90% of the 2026 spend.
- Hyperliquid uses 99% of its revenue to buy back and burn HYPE tokens.
- Pump.fun directs 50% of revenue to buy and burn PUMP, with $446.65 million already removed from circulation.
What proponents say about buybacks
Supporters argue buybacks connect token value to the protocol's real success. Max Shannon from Bitwise Europe says this creates a continuous bid for the token, directly linking its price to how well the platform performs.
Orest Gavryliak, chief legal officer at 1inch, says buybacks and burns are easier for users to understand than complex governance rights or fee structures. He noted that two main goals drive these moves: decreasing the circulating supply or showing why investing in the protocol's revenue makes sense.
Sam MacPherson, co-founder and CEO of Spark, took a different approach. His project acquired over 143 million SPK tokens through buybacks funded by surplus. Unlike Hyperliquid and Pump.fun, Spark does not burn these tokens. Instead, they stay in the treasury to reward long-term participants.
Questions about the best use of funds
Some experts argue that buying tokens might not be the smartest way to spend money. MacPherson suggested the real question is what offers the highest return for every extra dollar of surplus. If a protocol can reinvest that money to grow the business, he said, that could be far more valuable than simply buying back tokens.
History shows buybacks do not guarantee higher prices. Pump.fun has been aggressively buying and burning PUMP since July 2025, yet the token remains about 50% below its all-time high from September 2025. Similarly, Uniswap launched a buyback plan called UNIfication in November 2025, but UNI has given back roughly half of its gains since then.
Shannon noted that many factors influence prices, so these drops do not prove buybacks fail. However, he said they have sparked debate among investors about whether these projects should commit less revenue to buybacks and invest more in their teams and products.
Is the buyback scheme sustainable?
Investors need to separate a buyback strategy that pumps prices from a genuinely successful business model. A healthy protocol might decide buybacks are a good use of surplus cash. But a struggling project might use buybacks simply to prop up the price without fixing underlying issues.
MacPherson warned that "a buyback doesn't make an unsustainable protocol sustainable." Gavryliak added that if buybacks stopped, the token would lose its appeal only if there was no other reason to hold it. If the answer is no, he said, the problem goes deeper than tokenomics.
Regulatory risks loom
Token buybacks may look like stock buybacks, but the legal difference is significant. Shareholders often have voting rights, dividends, and a claim on company assets. Token holders generally lack those legal protections. Gavryliak described this as a market mechanism rather than a legally enforceable right.
This distinction matters for regulators. The Digital Asset Market Clarity (CLARITY) Act of 2025 is still a draft, but Gavryliak noted it raises a key question: where does the token's value come from? If it comes from the network's functionality, it may look like a commodity. If it comes from the team's efforts to ship products, market, or provide returns, it may be a security.
"Don't put the clothes of a stock on the token and expect it to be a commodity," Gavryliak said.
Why this matters for crypto investors
Crypto investors want to see real revenue, active users, and sound economics behind a token. Buybacks offer one way to link those things to token value. However, they can also serve as financial engineering that makes a token appear more valuable than it truly is without solving fundamental problems.
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