The crypto market is undergoing a structural shift in which asset valuation increasingly depends on the revenue generated by underlying protocols, according to Bitwise Chief Investment Officer Matt Hougan. This marks a departure from earlier models where the primary challenge was determining whether token holders captured any economic upside from a project's success.
More protocols are now directing a portion of collected revenue toward buying back and burning their own tokens. The mechanism links protocol success to token value by reducing supply, creating a clearer economic incentive for holders.
Hougan cited Hyperliquid as a leading example. The protocol generated over $800 million in revenue last year, and approximately 99 percent of that amount was used to buy back and burn the native HYPE token. Since launch, Hyperliquid has bought back and burned roughly $1.3 billion worth of HYPE tokens. As user activity grows, a portion of fees collected is systematically used to reduce circulating supply. Hougan said this direct link between protocol revenue and token supply reduction is a key driver of Hyperliquid's success.
Adoption of similar revenue-sharing models is spreading across the decentralized finance ecosystem. In December 2025, Uniswap approved the UNIfication proposal, initiating protocol fees and a buyback-and-burn mechanism for its UNI token. Since then, Uniswap has burned approximately 107 million UNI tokens. The protocol is currently generating about $100 million in annual revenue, with a portion of those earnings contributing to the ongoing token reduction.
Aave, a leading lending protocol, also adopted this strategy, launching weekly AAVE token buybacks in April 2025. In June 2026, Aave further developed its economic model with the Aavenomics 3.0 program, which provides for automatic token buybacks funded by protocol revenue and its GHO stablecoin.
Hougan said past criticism of cryptocurrencies for failing to generate income for token holders was often justified. He said Bitcoin, as a monetary asset, does not generate income for its holders, and investors frequently extended that perception to the broader crypto market.
U.S. regulatory policy historically complicated the situation. Under former SEC Chairs Jay Clayton and Gary Gensler, projects that distributed revenue to token holders risked allegations of offering unregistered securities. That environment led many crypto projects to launch tokens primarily as governance tools, granting holders voting rights but no share of protocol revenue.
The regulatory landscape began shifting following the court ruling in the SEC v. Ripple case. Hougan said the ruling contributed to a more favorable approach by U.S. regulators, enabling projects to explore revenue-sharing models with less legal uncertainty.
Hougan compared the current stage of crypto market development to the early internet industry before effective advertising models emerged. Investors initially valued internet companies by metrics such as user counts, but once clear monetization models appeared, revenue became the key valuation metric.
Hougan said he expects DeFi protocols and Layer 1 blockchains to generate increasing revenue over the next 12 to 24 months. That revenue growth, combined with token buyback and burn mechanisms, is projected to drive a significant market repricing, with valuations potentially doubling or more as the market fully incorporates this shift.
