Crypto valuations could double as protocols link revenue to tokens: Bitwise CIO

cointelegraphPublished on 2026-08-13Last updated on 2026-08-13

Abstract

Bitwise CIO Matt Hougan believes crypto valuations could double as protocols increasingly use their revenue to fund token buybacks and burns. He argues that crypto beyond Bitcoin is transitioning to a revenue-driven market, where network activity directly boosts native token value, a shift he says investors have not yet fully priced in. Hougan cites protocols like Hyperliquid, Uniswap, Aave, Pump.fun, and Lighter as examples that use fees to repurchase or remove tokens from circulation. He expects more DeFi applications and layer-1 networks to adopt similar mechanisms in the next 12-24 months. This stronger link between protocol revenue and token value could provide conventional valuation metrics, though Hougan notes token holders lack the legal rights of traditional shareholders. He attributes this shift partly to a more permissive US regulatory environment, which is easing securities-law concerns that previously deterred such features.

Crypto valuations could at least double as protocols increasingly use revenue to fund token buybacks and burns, according to Bitwise Chief Investment Officer Matt Hougan.

On Wednesday, Hougan said crypto outside of Bitcoin is becoming a revenue-driven market in which network activity feeds into native-token value. He said investors have not priced in that change, leaving some crypto assets undervalued.

Hougan pointed to Hyperliquid, Uniswap, Aave, Pump.fun and Lighter, protocols that use fees to repurchase or remove tokens from circulation. He said he expects decentralized finance (DeFi) applications and layer-1 networks to adopt similar revenue-capture mechanisms over the next 12 to 24 months.

Stronger links between protocol revenue and token value could give investors conventional valuation metrics, Hougan said, adding that token holders lack shareholders’ legal claims to cash flow and that community-set tokenomics can change.

DeFi protocols turn fees into token demand

Hyperliquid, the decentralized exchange that generated over $800 million in revenue last year, uses about 99% of this to buy and burn HYPE. On Aug. 6, Hyperliquid reported $169 million in second-quarter revenue and directed $141 million toward HYPE buybacks.

Uniswap also linked revenue to its token after its “UNIfication” overhaul approved the activation of protocol fees to fund UNI burns on Dec.22, 2025. Under the mechanism, collected fees can be claimed by burning UNI, linking protocol activity to reductions in the token’s supply.

Related: Uniswap founder rejects claims v4 fees reduce LP earnings

Meanwhile, Aave DAO’s buyback program purchased more than 205,000 AAVE during its first 10 months. On June 25, Aave founder Stani Kulechov said the team was designing an automated, non-discretionary buyback mechanism.

“100% of Aave Protocol and GHO revenue goes to the $AAVE token. This was established in the Aave Will Win proposal,” Kulechov wrote.

Hougan attributed the shift to a more permissive regulatory environment in the US after years in which projects avoided revenue-sharing features over securities-law concerns. On Aug. 5, he said that regulatory guidance could allow crypto to keep expanding even without the CLARITY Act.

Magazine: Inside the fake crypto startup that fooled North Korean IT workers

Related Questions

QWhat is the main reason Matt Hougan believes crypto valuations could double?

AMatt Hougan believes crypto valuations could at least double because protocols are increasingly using their revenue to fund token buybacks and burns, creating a stronger link between network activity and native-token value that he thinks the market hasn't fully priced in yet.

QWhich specific protocols does Hougan mention as examples of using fees for token repurchases or burns?

AHougan mentions Hyperliquid, Uniswap, Aave, Pump.fun, and Lighter as protocols that use fees to repurchase or remove tokens from circulation.

QHow does the Uniswap protocol plan to link its revenue to the UNI token starting in December 2025?

AFollowing its 'UNIfication' overhaul, the Uniswap protocol plans to activate protocol fees on December 22, 2025, which will be used to fund UNI token burns. Collected fees can be claimed by burning UNI, thereby linking protocol activity to a reduction in the token's supply.

QWhat percentage of Hyperliquid's revenue is directed towards buying and burning its HYPE token, and what was the Q2 2024 figure?

AHyperliquid uses about 99% of its revenue to buy and burn HYPE tokens. In the second quarter of 2024, it reported $169 million in revenue and directed $141 million of that towards HYPE buybacks.

QAccording to Hougan, what factor is enabling this shift toward revenue-sharing tokenomics that was previously avoided?

AHougan attributes this shift to a more permissive regulatory environment in the United States. For years, projects avoided revenue-sharing features due to securities-law concerns, but recent regulatory guidance has created more space for these mechanisms.

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