The crypto market is undergoing a fundamental shift in how tokens are valued, moving away from hype and speculation toward measurable business fundamentals like revenue, cash flows, and token buyback programs. According to Bitwise Chief Investment Officer Matt Hougan, this transition means many digital assets remain significantly undervalued compared to their actual economic output.

What's Changing in How Crypto Tokens Get Their Value?

For years, a puzzling question haunted the crypto industry: why didn't a blockchain project's financial success translate into higher token prices? Platforms attracted millions of users and generated billions in revenue, yet token holders saw little direct benefit. That dynamic is now reversing.

The shift centers on a simple but powerful mechanism: projects are increasingly directing revenue back to token holders through buyback and burn programs. Here's how it works in practice:

• Token Buyback: Projects use their revenue to purchase their own tokens from the open market, similar to stock buyback programs at traditional companies.
• Token Burning: After purchasing tokens, projects permanently remove them from circulation by sending them to addresses that cannot be accessed.
• Supply Reduction: With fewer tokens in circulation and steady or growing demand, the remaining tokens become scarcer and potentially more valuable.
• Revenue Sharing: Token holders benefit indirectly from the protocol's profitability without receiving formal dividend payments or legal ownership claims.

This approach mirrors how public companies return value to shareholders through buybacks, but with a crucial difference: tokens do not grant legal ownership rights or guaranteed cash flows the way shares do.

Which Crypto Projects Are Leading This Trend?

Several major protocols have already implemented aggressive buyback and burn strategies, demonstrating the viability of this model. Hyperliquid stands out as the most dramatic example. Since launching its HYPE token at the end of 2024, the trading platform has directed approximately 99% of its revenue into token buybacks and burns. From launch through summer 2026, Hyperliquid allocated about $1.3 billion to this purpose. The token's price has risen roughly 800% since launch, entering the top ten largest crypto assets despite not being listed on major exchanges, while Bitcoin fell about one-third over the same period.

Other established protocols are following suit with their own revenue-sharing mechanisms:

• Uniswap (UNI token): By August 2026, the decentralized exchange protocol generated approximately $100 million in annual revenue, with all of it directed toward UNI buybacks and burns. In December 2025, following the UNIfication proposal, the protocol burned 100 million UNI tokens, representing 10% of the maximum supply, with an additional 7 million UNI burned later.
• Aave (AAVE token): Since April 2025, the lending protocol has conducted weekly AAVE buybacks using protocol revenue, spending roughly $30 million annually, or about 20% of total revenue. In June 2026, Aave launched Aavenomics 3.0, which automatically directs protocol and GHO stablecoin revenue toward AAVE buybacks. By August 2026, the project had repurchased more than 1.2% of total token supply.
• Pump (PUMP token): This meme coin launch service adopted one of the most aggressive models, beginning buybacks just days after PUMP's July 2025 launch. By April 2026, the project had burned tokens worth $370 million, representing 36% of circulating supply. Additionally, 50% of the following year's net profit flows to an irreversible smart contract that automatically executes buybacks and burns. The service's annual revenue stands at approximately $328 million.
• Lighter (LIT token): This trading blockchain platform, a major competitor to Hyperliquid, has directed commission revenue toward LIT buybacks and burns since its early 2026 launch. By mid-2026, the project had repurchased roughly 6% of circulating tokens, with annual platform revenue around $67 million.

The trend extends beyond decentralized finance (DeFi) services to layer-1 blockchains, which are independent blockchain networks that process transactions directly rather than relying on other chains. Solana developers have proposed reducing SOL token inflation while increasing fee burning by nearly 14 times. Aptos previously took a similar step, increasing transaction fees tenfold; user activity did not decline and instead nearly tripled, causing annual APT token burning to grow from roughly 90,000 to 1.9 million tokens.

Why Did This Model Take So Long to Emerge?

Regulatory uncertainty in the United States significantly delayed the adoption of revenue-sharing tokenomics. The Securities and Exchange Commission (SEC) historically viewed distributing income to token holders as a potential indicator of illegal securities issuance, which would subject tokens to strict financial regulations. This regulatory concern prevented major projects like Uniswap and Aave from implementing buyback programs for years.

Two major developments shifted this landscape. First, Ripple's 2023 court victory against the SEC limited how broadly securities law could be applied to crypto tokens. Second, the SEC's stance softened under new leadership, creating more favorable conditions for projects to implement income-sharing mechanisms through tokenomics.

How to Evaluate Crypto Projects Using Business Metrics

• Protocol Revenue: Examine how much money the project generates annually from fees, services, or other sources. Higher revenue provides more capital for buybacks and demonstrates real economic activity.
• Buyback Percentage: Determine what share of revenue the project directs toward token repurchases. Projects allocating 50% or more show stronger commitment to supporting token value.
• Tokens Burned to Date: Calculate what percentage of total token supply has been permanently removed from circulation. Higher burn percentages indicate more aggressive supply reduction.
• Burn Mechanism Design: Assess whether buybacks are discretionary or automatic. Automatic mechanisms through smart contracts provide more predictable, transparent value distribution.
• User Growth and Activity: Monitor whether the protocol's user base and transaction volume are expanding, which directly supports revenue growth and future buyback capacity.

According to Matt Hougan, this valuation shift mirrors the early 2000s internet industry, when investors questioned whether large online platforms could generate profits from advertising without losing users. Once advertising models proved viable, both profits and user bases grew simultaneously. Hougan believes crypto is entering a similar phase, where DeFi projects and layer-1 blockchains will increasingly direct revenue toward token support while maintaining or expanding their user bases.

Hougan highlighted significant valuation gaps in major protocols. Uniswap already matches Coinbase in spot trading volumes but trades at only $2.4 billion in market capitalization, compared to Coinbase's much higher valuation. Aave and Morpho, another protocol improving its tokenomics, hold strong positions in on-chain lending but have a combined market capitalization of just $2.4 billion. Hyperliquid, described as one of the fastest-growing fintech companies, would be valued at only 17 to 60 years of profits at current market prices, an extremely low valuation for a business of its scale and growth rate.

"Uniswap is already comparable to Coinbase in spot trading volumes, but is valued at only $2.4 billion. Aave and Morpho, which is also improving tokenomics, hold strong positions in the on-chain lending market, but their combined capitalization is also only $2.4 billion. Hyperliquid is one of the fastest-growing fintech companies I have ever seen, but the market would conditionally value it at only 17 to 60 years of profits," said Matt Hougan.

Matt Hougan, Chief Investment Officer at Bitwise

The transition from speculation-driven valuations to business fundamentals represents a maturation of the crypto market. As more projects implement revenue-sharing mechanisms and demonstrate sustainable economics, the gap between token prices and underlying business value may narrow. Over the next one to two years, Hougan expects an increasing share of DeFi and blockchain revenue to flow toward token support, potentially reshaping how investors evaluate digital assets.