Crypto assets outside Bitcoin are becoming revenue-driven markets where protocol activity directly funds token buybacks and burns, according to Bitwise Chief Investment Officer Matt Hougan. The shift could push valuations at least double their current levels as investors reprice tokens linked to protocol revenue streams.
Hougan stated that investors have not yet priced in this transition to revenue-driven models, leaving some crypto assets undervalued. He expects decentralized finance protocols and layer-1 networks to adopt similar mechanisms over the next 12 to 24 months.
The trend is already visible among leading protocols. Uniswap activated protocol fees to fund UNI token burns following its “UNIfication” overhaul, approved on Dec. 22, 2025. Aave founder Stani Kulechov announced an automated buyback mechanism design on June 25. Hyperliquid, a decentralized exchange, directed $141 million toward HYPE token buybacks in the second quarter alone, part of $169 million in quarterly revenue.
“100% of Aave Protocol and GHO revenue goes to the $AAVE token. This was established in the Aave Will Win proposal,” Kulechov said. Aave’s buyback program purchased 205,000 AAVE tokens in its first 10 months of operation.
Revenue Capture and Valuation Framework
Hyperliquid generated $800 million in revenue over the past year and directs 99% of it toward token buybacks and burns. This direct link between protocol activity and token supply reduction creates what Hougan described as a more conventional valuation framework for crypto assets.
The mechanism mirrors equity buyback programs in traditional finance, though token holders lack the legal claims to cash flow that shareholders possess. Tokenomics set by community governance can also change, introducing valuation uncertainty.
Hougan attributed the shift toward revenue-sharing features to a more permissive regulatory environment in the US. For years, crypto projects had avoided implementing these mechanisms due to securities-law concerns. Recent regulatory guidance has reduced that friction.
The valuation case rests on a simple premise: as protocol revenue grows and more tokens get removed from circulation through burns, the remaining tokens gain proportional claim to future cash flows. This establishes a direct connection between network activity and token value that had been absent in earlier DeFi models.
