Is the project buyback dividend really coming to an end? - ChainCatcher

Author: Chloe, ChainCatcher

In the world of traditional finance, stock buybacks are often seen as a “confidence booster” for the market. When a company announces a share repurchase, it usually indicates that management believes the stock is undervalued or that the company has ample cash flow. However, applying similar strategies in the Web3 projects does not yield positive results.

Recently, Jupiter co-founder SIONG initiated a discussion on X, proposing to halt the $JUP token buyback plan. He stated that Jupiter had invested over $70 million in token buybacks over the past year, but the token price performance has been lackluster; meanwhile, Helium founder Amir Haleem directly announced the suspension of token buybacks, describing it as “throwing money into a black hole.”

Why can’t millions of dollars in real money stir up even a ripple in the crypto market? Is the problem rooted in the underlying design of the buyback strategy? Below is a summary of last year’s project buyback data performance and market opinions on project buybacks.

Data Performance: The Collective Failures of 2025 Buyback Projects

According to market research firm blockmates’ tracking of buyback projects from January to October 2025, the top five projects are Hyperliquid, Pump.fun, LayerZero, Raydium, and Sky. Hyperliquid’s buyback amount reached as high as $716 million, while Sky, at the bottom, also invested $83 million.

However, the investment does not correspond proportionally to returns. Except for Hyperliquid, whose token price remained strong in the first three quarters (currently down from $45.5 at the end of October to $25.94 before press time), the other projects have continued to decline. This phenomenon has raised market doubts: if buybacks cannot increase token value, is this money simply being wasted?

Viewpoint Debate: Balancing Buybacks, Staking, and Growth Incentives

Regarding whether project teams should stop buybacks, there are very different opinions:

Jupiter and Helium founders tend to favor stopping token buybacks and redirecting the funds toward “acquiring users,” possibly through subsidizing transaction fees, rewarding new users, or enhancing product features to strengthen fundamentals. However, this shift still faces challenges: tokens will continue to unlock, and users may sell due to lack of long-term confidence, creating ongoing selling pressure and risking further significant declines in token prices.

DeFi OG CM states that the core purpose of buybacks is to reduce circulating supply and establish a “periodic deflation” model. Ultimately, token prices depend on market supply and demand and project fundamentals, not on buyback actions alone. Buybacks are beneficial to token holders but do not guarantee short-term price increases. Project teams should not easily halt buybacks due to low prices or high costs.

Helius CEO Mert Mumtaz notes that buybacks are essentially a pessimistic mechanism, implying that project teams cannot find better uses for funds than short-term price boosts, attempting to trigger growth cycles through price reflexivity rather than product development. In a competitive market, buybacks are not the best strategy; the only effective edge case is opportunistic buybacks during market crashes (when equity is irrationally undervalued), combined with aggressive reinvestment during normal periods. This perspective is from the founders’ point of view, not investors’.

Former Aave institutional business head and ConsenSys fintech partner Ajit Tripathi states that buyback narratives are, after meme coins, the most destructive to value. This logic originated from Solana’s marketing claiming to outperform Ethereum, which ultimately harmed all tokens, including those with revenue, forcing everyone into purely financial games.

Additionally, many viewpoints suggest alternative approaches. For example, Jordi Alexander, founder of Selini Capital, observed that many project failures are not due to mechanisms but to the “timing” of buybacks. Some star projects in this cycle (like HYPE, ENA, $JUP) carried out large-scale buybacks during the market’s most exuberant and overvalued periods. When token P/E ratios soared due to hype, projects continued buybacks, essentially buying the top for sellers—an incorrect decision. Jordi recommends that projects adopt more sophisticated “financial engineering,” ideally based on dynamic P/E ratio-driven buybacks.

Solana founder Anatoly believes that projects should not pursue short-term price stimulation (buybacks) but should learn from traditional finance and build a 10-year capital accumulation process. He favors staking mechanisms that reward long-term holders with more shares, thereby diluting short-term speculators. He suggests storing profits as “future token entitlement” rather than spending them on market volatility.

Represented by Jordi Alexander of Selini Capital, the view is that buybacks themselves are not wrong, but the “amateurish execution” is. Projects should hire professional financial advisors to adjust buyback strategies based on token P/E ratios and market cycles, rather than blindly repurchasing, which can deplete treasury at market highs and leave no funds for stabilization during downturns.

From “Blind Buybacks” to “Strategic Value Management” Evolution

Token buyback is fundamentally a “deflation tool,” not a guarantee of price increases. In market fluctuations, buybacks more often serve as a form of “passive defense,” reducing supply and establishing a price floor, but cannot alone reverse complex trends driven by macro conditions, unlocking pressures, or market sentiment.

The growth path of token value should evolve from simple buyback actions to strategic value management. First, projects need to establish more financially sound execution strategies, such as following the logic of “buy low, reserve high”: when the token price is far below intrinsic value, steadfastly execute buybacks to maximize capital return; when market enthusiasm is excessive and valuations are unreasonable, halt buybacks, store profits in the treasury as reserves, or use them to boost product growth.

Furthermore, buybacks only address “supply” issues and cannot create “demand.” A project must give users reasons to hold tokens continuously. These reasons may include expected protocol revenue sharing, governance rights, or the product’s irreplaceable competitive advantages. Without solid fundamentals, any form of buyback ultimately becomes an exit channel for arbitrageurs.