Bitwise's Matt Hougan discusses how tokenomics is shaping the crypto landscape, with protocols adapting to include buybacks and burns.
The focus on tokenomics is shifting as investors look beyond Bitcoin to evaluate the financial performance of various protocols. According to Matt Hougan, Chief Investment Officer at Bitwise, some emerging projects are now providing returns to their token holders through mechanisms like buybacks and token burns.
Hougan noted that the cryptocurrency sector has been historically criticized for generating revenue that had little effect on token holders. He attributed this to the structure of Bitcoin, which was not designed to create passive income, alongside significant regulatory pressures from the SEC between 2017 and 2025.
He pointed out that a critical turning point occurred in July 2023, when the SEC lost its case against Ripple concerning XRP sales to retail investors. Following favorable rulings for Ripple, the appeals from both parties were dropped by August 2025, coinciding with a more lenient regulatory environment under Paul Atkins' leadership.
Hyperliquid emerged as a prime example of successful tokenomics, with the project generating over $800 million in revenue in the past year. It allocated nearly all this income for buying back and burning its HYPE tokens, totaling $1.3 billion since its launch in November 2024.
Other protocols are also adapting. Uniswap, for instance, secured 99.9% support for its UNIfication proposal, which included the burn of 100 million UNI tokens. Aave has committed to weekly buybacks of its AAVE tokens and introduced the Aavenomics 3.0 initiative in June 2026.
In a more aggressive approach, Pump.fun reported destroying PUMP tokens worth $370 million by April 2025. Positive trends have also been observed within projects like Solana and Aptos.
However, Hougan cautioned that holders of crypto assets do not have a legal entitlement to income from these assets, as the specifics of tokenomics can evolve based on community decisions. Despite this variability, he believes that the connection between the revenue generated by protocols and the associated token value will continue to strengthen.
"For many years, profitability was the best argument against cryptocurrencies. Soon it will become the strongest argument in their favor," Hougan stated.
It is important to note that Bitcoin miners experienced a significant decline in revenue from fees in August, reaching a ten-year low.
