Crypto valuations beyond Bitcoin could double or more as protocols increasingly link network revenue to their native tokens. Bitwise Chief Investment Officer Matt Hougan made this argument in an Aug. 12 memo, detailing a shift in on-chain economic models.
Hougan expects more DeFi protocols and Layer 1 networks to adopt revenue-capture structures over the next 12 to 24 months, directly connecting protocol activity to token demand.
Hyperliquid provides a clear example. The Layer 1 exchange has routed over $1.16 billion in trading fees into HYPE token purchases, creating recurring token demand tied directly to exchange volume.
Hyperliquid's documentation said trading fees flow into an Assistance Fund, which converts collected fees into HYPE, then burns them — permanently removing supply from both circulating and total counts.
Hougan estimates approximately 99 percent of Hyperliquid's fee revenue has been directed to this burn mechanism, which has become central to the HYPE token's investment thesis.
Uniswap has advanced toward a similar structure. Its UNIfication governance proposal, approved in December 2025, initiated the burn of 100 million UNI tokens from the protocol treasury.
UNIfication also activated protocol fees for Uniswap's v2 and v3 liquidity pools. By July, Uniswap governance said those fees had financed the burn of about 7.5 million additional UNI, valued at roughly $25.6 million.
Expansion of the fee system continues. An on-chain vote executed July 27 activated v4 protocol fees across Ethereum, Arbitrum, Base, BNB Chain, Polygon, Optimism and Robinhood Chain, passing with 46.6 million UNI in favor.
Historically, many governance tokens offered voting rights but lacked a direct economic link between protocol fees and token demand. Buyback-and-burn systems aim to close that gap by using protocol revenue to acquire tokens from the open market and remove them from supply.
Hougan compared the structure to corporate stock buybacks but acknowledged key distinctions. Crypto tokens do not automatically carry the legal rights attached to corporate equity, and token holders generally lack contractual claims on profits, assets or distributions.
Governance actions can also change token economics at any time. The Bitwise memo itself includes a disclaimer that it represents a point-in-time assessment and is neither a guarantee of future results nor investment advice.
The burn mechanisms depend on sustained trading volumes and fee generation. Weaker activity would reduce revenue available for token purchases and burns.
Hougan's analysis also cited Aave, Pump.fun and Lighter as projects using fees or protocol revenue to fund token purchases or burns.
