Bitwise Chief Investment Officer Matt Hougan believes many cryptocurrencies could see significantly higher valuations if more projects strengthen the connection between protocol revenue and the value of their tokens.
In a recent memo, Hougan pointed to projects such as Hyperliquid, Uniswap, Aave, Pump.fun, and Lighter as examples of platforms that are using revenue generated from network activity to buy back or burn tokens. He expects more decentralized finance (DeFi) projects and blockchain networks to adopt similar models over the next one to two years.
According to Hougan, stronger revenue-sharing mechanisms could make crypto tokens more attractive to investors because they create a clearer link between a project’s success and token demand. He suggested that valuations could potentially double or more if this trend continues, though he stressed that this is a forecast rather than a guarantee.
Hyperliquid is one of the most notable examples. The platform directs most of its trading fee revenue toward purchasing HYPE tokens through its Assistance Fund. Those tokens are then removed from circulation through a burn mechanism, reducing supply and potentially increasing scarcity.
Uniswap has also expanded its token burn strategy. Since activating protocol fees and introducing changes to its governance model, the platform has used a portion of fee revenue to fund ongoing UNI token burns. Bitwise
Aave has taken a different approach by using treasury funds to buy back AAVE tokens. Over the first ten months of its buyback program, the protocol acquired more than 205,000 AAVE tokens through purchases funded by protocol revenue and treasury allocations.
The trend is not limited to DeFi platforms. Pump.fun has allocated part of its revenue toward automated token buybacks and burns, while discussions are underway within the Solana ecosystem about increasing token burns through changes to the network’s fee structure.
Hougan also believes that improving regulatory clarity in the United States could encourage more projects to adopt revenue-linked token models. However, he noted that legal and regulatory questions remain, and the future treatment of such mechanisms will depend on how regulators choose to approach the sector.
The US Securities and Exchange Commission is expected to continue discussions on crypto-related regulations, including potential rules for certain crypto asset offerings. Industry participants will be watching closely, as future regulatory decisions could influence how widely revenue-sharing and token buyback models are adopted.
While the concept is gaining momentum, Hougan emphasized that higher valuations are not guaranteed. The success of these models will ultimately depend on factors such as network activity, revenue generation, investor demand, and the evolving regulatory environment.
