Token Buybacks Surge Over 400%, But Keyrock Warns Discipline Is Key

Tokenholder payouts in crypto have soared more than 400% since 2024, reaching nearly $800 million in Q3 2025, but Amir Hajian, head of research at market-making firm Keyrock, cautions that most buybacks are still funded by treasuries rather than recurring revenue. In a new report, Hajian argues that token buybacks must evolve from hype-driven spending to disciplined, valuation-aware capital management.

Token buybacks allow blockchain projects to repurchase their own tokens from the open market, similar to stock buybacks. By reducing circulating supply, buybacks can signal confidence to investors and potentially boost token value.

Hajian notes that the rise of buybacks marks a turning point in crypto’s maturity. What began as a method to demonstrate that protocols could return value like traditional companies has become a test of financial realism. The critical question is whether projects can repurchase with the prudence of a central bank, rather than the reflexive behavior of a bull market.

Much of the capital used for buybacks comes from treasuries rather than ongoing revenue, highlighting the risk of draining future runway in the pursuit of legitimacy. With clearer U.S. regulations and protocols increasingly generating consistent fee income, buybacks have emerged as a way to link revenue to holder value.

Across 12 revenue-distributing protocols studied, teams returned an average of 64% of total revenue to token holders, far higher than traditional DAOs, which reinvest about three-quarters of their spending into growth and development. Hajian emphasizes that this focus on distributions over reinvestment forces protocols to confront the limits of one-time treasury spending.

To address this, some teams are tying repurchases to valuation metrics, cash flow, and market conditions rather than fixed percentages. Hajian highlights two emerging approaches:

• Trigger-based models: Spending is tied to fundamentals such as valuation multiples or fully diluted value bands, increasing buybacks when tokens appear undervalued and scaling back when prices are high.
• Options-based structures: Protocols sell covered puts, earning premium income while committing to future buy levels, generating revenue even when no buyback occurs.

These mechanisms signal a maturing approach to tokenomics, aligning buybacks with market realities and sustainable treasury management.

However, Hajian warns that execution quality remains a major risk. Many projects use taker orders that drain liquidity from thin order books, amplifying price swings once buying stops. Leveraging maker orders and calibrating buybacks to organic volume could allow protocols to add liquidity rather than consume it.

When Should Token Buybacks Happen?
Hajian argues that buybacks should only occur when revenues are recurring, treasuries can cover at least two years of operations, and token valuation multiples indicate undervaluation. Mature projects tend to launch buybacks once financial strength is evident—stable revenue, deep market liquidity, and economically justified returns—whereas newer teams often deploy them too early to gain attention, risking depletion of reserves for growth, product development, and R&D.

Ultimately, Hajian writes, the true measure is not the presence of a buyback policy but the discipline to wait until fundamentals justify it. Buybacks are not a sign of success—they are a test of whether crypto can transition from distributing promise to managing profit.