The Funding: Why token buybacks are suddenly back in focus

Token buybacks are back at the center of the crypto conversation, but this time the focus is on whether they actually work.

In 2025, crypto protocols spent more than $1.4 billion repurchasing their own tokens, according to CoinGecko data. Yet prices for many of those tokens remain flat or sharply lower, raising fresh doubts about how much buybacks really achieve.

Recent decisions by major protocols have brought those questions into sharper focus. Helium, a decentralized wireless network, paused its buyback program after seeing no market impact. Jupiter, a Solana-based DEX aggregator, is also rethinking its approach after spending more than $70 million on buybacks last year, even as its JUP token continues to trade well below its highs.

Meanwhile, Optimism, the team behind an Ethereum Layer 2 network, is weighing a plan to route 50% of Superchain revenue into recurring OP buybacks, pending governance approval. The contrast between fresh proposals and some pullbacks sets the stage for a closer look at when buybacks make sense, when they don’t, and what works better instead.

Why buybacks haven’t held token prices

Buybacks have struggled to support token prices mainly because they are small relative to the selling pressure in the market, the experts I spoke to explained.

“Token buybacks create way less demand than there is selling pressure,” said Lex Sokolin, co-founder and managing partner at Generative Ventures. “If you buy $100 million of token value per year but have $20 million of daily volume, it will make little difference. For most assets, the buybacks are a few hundred thousand in the face of millions in selling pressure from vesting unlocks.”

Others echoed that point. Rob Hadick, general partner at Dragonfly, said it ultimately comes down to basic supply and demand: if there is more selling than buying, prices fall regardless of buybacks. Amir Hajian, a researcher at crypto investment firm Keyrock, pointed to tokenomics as a major headwind, as heavy unlock schedules and ongoing emissions can easily outweigh buyback demand. “Even a well-designed buyback program can struggle if sell pressure driven by unfriendly tokenomics materially outweighs the buy pressure being introduced,” he said.

Timing and execution have also mattered. Boris Revsin, general partner and managing director at Tribe Capital, said many programs bought tokens when prices and revenues were already high rather than during downturns. Others failed to reduce supply in a lasting way or lacked consistency, making buybacks feel “cosmetic” and leading to short-lived price bumps rather than sustained repricing, he said.

In many cases, the programs may have been simply too small. Some buyback programs are “too small to be effective and function more as optics than as real market support,” Hajian said. That does not mean buybacks are fundamentally broken, he added, but that sizing and execution matter far more than teams often assume.

There is also a deeper structural issue. Hajian noted that most tokens still do not give holders clear rights to protocol cash flows or transparency on how revenues are managed. “Tokenholder rights are largely absent,” he said. “Tokens do not guarantee dividends, confer legal claims, or offer the clarity of traditional earnings metrics. As a result, the relationship between protocol performance and tokenholder value is indirect and often uncertain.”

In that context, buybacks stand out as one of the few visible ways teams try to return value. But on their own, they cannot close the gap between protocol performance and token prices, Hajian said.

When token buybacks actually work

Across the experts I spoke to, there was broad agreement that buybacks only work once a protocol is already on solid footing. That means real usage, stable revenue, and enough capital to keep investing in growth at the same time. Buybacks are most effective when they reinforce genuine demand rather than try to replace it, said Anirudh Pai, partner at Robot Ventures, especially when treasury capital is deep enough that buybacks sit alongside — not instead of — product and ecosystem investment.

Scale and funding source matter just as much as intent. Buybacks tend to work only when they are meaningful relative to a project’s valuation and clearly funded by recurring protocol revenue, according to Hajian of Keyrock. Because most tokens do not give holders direct claims on cash flows, buybacks are one of the few ways teams can link protocol performance to tokenholder value — but only if the scale is large enough to matter, Hajian noted.

How buybacks are run is often as important as how much is spent. Programs that are frequent, predictable, and rules-based tend to inspire more confidence than discretionary or one-off efforts, said Revsin of Tribe Capital. Buybacks paired with real supply reduction also tend to land better with investors, reinforcing the idea that they reflect ongoing usage rather than “financial engineering,” Revsin said.

Timing also plays a role. Mathijs van Esch, general partner at Maven 11, noted that buybacks make the most sense once a protocol has fewer high-return growth opportunities left. Earlier-stage projects may still use smaller buybacks, not to drive price, but to signal that the token is intended to be the main vehicle for long-term value as the project matures, according to van Esch.

Ultimately, buybacks work best as a consequence of success, not a substitute for it. As Hadick put it, buybacks can be a useful part of a broader value-creation strategy — but only alongside continued product development, demand generation, disciplined emissions, and sustained investment in growth. Without those foundations, buybacks rarely deliver lasting results on their own.

When token buybacks don’t make sense

Several experts stressed that teams should avoid buybacks if their balance sheet is stretched or their runway is thin. Hajian said projects that do not have at least two years of runway to survive a downturn should think twice about returning value through buybacks, since premature revenue distribution can starve product development, research, and distribution at the worst possible time.

Buybacks can also do more harm than good when fundamentals are weak. Pai said buybacks are worth pausing if token demand is mostly speculative or if the program risks masking weak adoption or product-market fit. In volatile markets, poorly timed buybacks can amplify losses rather than stabilize prices, undermining credibility with long-term holders and signaling weak capital discipline instead of confidence, according to Pai.

For many projects, the opportunity cost is simply too high. Hadick and van Esch both pointed to the same principle: if capital can still be deployed into high-return growth opportunities, buybacks should wait. Investing in product, distribution, and ecosystem growth should come first, with buybacks considered only once there are no better uses for the cash.

Still, investing in growth does not guarantee that the benefits accrue to tokenholders. Hajian noted that because there is no legal or structural link between a protocol’s cash flows and tokenholder value, tokens can continue to struggle even when the underlying protocol performs well.

Some VCs pointed to dividends as a cleaner alternative. Hadick and Sokolin both highlighted distributions as a more direct form of value accrual, particularly if regulatory clarity improves and protocols rethink their labs-versus-foundation structures. “I’d prefer it if we instead used dividends as revenue distributions, but that requires regulatory and tax issues to be resolved,” Sokolin said. “Distributions feel like a reason to hold the token regardless of market price.”

Market and macro conditions also matter. Sokolin said buybacks tend to make more sense when a token is least liquid and least valuable. Hajian echoed that view, noting that buybacks are more effective when initiated during weaker market conditions, after teams have ensured strong balance sheets. By contrast, when markets are strong and valuations elevated, buybacks warrant closer scrutiny. “In those conditions, valuation sensitivity and the use of hybrid execution models become increasingly important to avoid overpaying and to preserve long-term treasury value,” he said.

Looking ahead

Looking ahead to 2026, experts broadly expect buybacks to stick around, but in a more disciplined form. As more protocols reach product-market fit and generate revenue, buybacks are likely to remain one of the main ways teams try to connect protocol success with tokenholder outcomes. Simple buyback announcements without strong fundamentals are likely to be met with indifference, while well-structured programs tied to durable revenue and clear execution should stand out. Hybrid models that combine buybacks with revenue sharing, staking, or burns are also expected to become more common.

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