Bitwise Chief Investment Officer Matt Hougan projects crypto valuations, excluding Bitcoin, could at least double as protocols increasingly link network revenue to native token value through buybacks and burns. Hougan said the market has not yet priced in this shift, suggesting many crypto assets are undervalued.
Hougan anticipates revenue-capture mechanisms will become widespread across decentralized finance applications and layer-1 networks over the next 12 to 24 months. These mechanisms route fees generated by protocol activity toward repurchasing or removing tokens from circulation, directly tying network utility to token economics.
Hyperliquid, a decentralized exchange, generated over $800 million in revenue last year. The protocol directs approximately 99 percent of this revenue to buy back and burn its native HYPE token. On Aug. 6, Hyperliquid reported $169 million in second-quarter revenue, with $141 million allocated to HYPE token buybacks.
Uniswap implemented a revenue-linked model following its UNIfication overhaul, which activated protocol fees for UNI token burns on Dec. 22. Under this framework, collected fees can be claimed by burning UNI, directly reducing the token's supply based on protocol activity.
The Aave DAO has acquired more than 205,000 AAVE tokens within its first 10 months of buyback operations. On June 25, Aave founder Stani Kulechov confirmed the team was developing an automated, non-discretionary buyback mechanism, saying "100% of Aave Protocol and GHO revenue goes to the $AAVE token. This was established in the Aave Will Win proposal."
Other protocols, including Pump.fun and Lighter, also employ fee-based mechanisms to repurchase or remove their tokens from circulation.
Hougan attributed this shift in tokenomics to a more permissive regulatory environment within the U.S. He noted that projects previously avoided revenue-sharing features due to concerns over securities laws, and that regulatory guidance could facilitate continued crypto expansion.
Hougan cautioned that token holders do not possess the same legal claims to cash flow as traditional shareholders and that community-set tokenomics can change over time.
