Crypto News: Token Buybacks Face Timing Flaws, New Models Propose Solution

Key Insights:

• Crypto news: Token buyback programs concentrate purchases during periods of high market demand, while reducing spending during periods of lower demand.
• Current taker-focused buyback models remove liquidity and create immediate price impact during high-activity periods.
• New maker-based approaches and temporal smoothing techniques address structural timing inefficiencies in protocol buyback programs.

Crypto protocols operate with a fundamental flaw in their token buyback strategies, which concentrate purchases at market peaks while starving them during periods of lower prices.

An anonymous Raydium contributor known as Infra identified this structural problem in an Aug. 26 report shared via X.

The analysis revealed how current revenue-based buyback programs created reflexive timing issues that worked against optimal execution.

Reflexive Timing Issues

The dominant buyback model ties spending directly to protocol revenue, which creates counterproductive timing patterns.

When markets heat up, prices, activity, and fees climb together, which pushes programmatic buybacks to spend more during expensive periods.

When markets cool, activity and fees fall together, which reduces buyback spend during cheaper periods.

Jupiter Exchange exemplified this approach by allocating 50% of protocol fees toward repurchasing JUP tokens.

The exchange generated $102 Million in revenue during 2024, with revenue surging from $3 Million in January to $21 Million in December.

The buyback program spent approximately $50 Million on JUP repurchases throughout 2025, creating sustained buying pressure but following the problematic timing pattern.

Ethena Foundation executed a similar model through its $260 Million buyback program via StablecoinX. The program allocated $5 Million daily over six weeks, repurchasing 83 million ENA tokens, which represent 3.48% of the circulating supply.

Hyperliquid demonstrated the most aggressive implementation of this model. The protocol’s automated buyback strategy utilized 97% of the protocol fees to repurchase HYPE tokens. In total, it gulped 29.8 million tokens, valued at over $1.5 Billion.

Execution Alternatives

The report presented maker buybacks as an alternative to current taker-focused approaches.

Most existing programs bought as takers by lifting offers in existing liquidity. This approach is transparent and straightforward, yet it removes depth, pays the spread, and could move prices during busy periods.

The maker alternative involves conducting buybacks by providing liquidity rather than taking it. The model consists of adding liquidity through bids by creating limit orders on order books or establishing single-sided, concentrated liquidity market maker positions.

Further, the report suggested that protocols could open bids at a fixed percentage below the market price, based on the previous 24-hour or seven-day revenue, and adjust these orders to trail market movements.

The approach works particularly well when the bought-back token is closely correlated with the capital used, resulting in less volatility compared to cross-asset pairs.

Buying tokens directly from would-be sellers with increased liquidity depth would help mitigate downside volatility. For decentralized exchanges (DEX), maker buybacks would enhance the core product while facilitating token accumulation more efficiently.

Temporal Smoothing

The report also noted several approaches to reduce timing inefficiencies in current models. Temporal smoothing involves spreading the weekly revenue across the following year through buybacks.

This alternative creates consistent buying pressure independent of market conditions and removes reflexive elements.

In the Raydium example used in the report, approximately $25 Million in capital allocated to buybacks in January would have resulted in roughly $500,000 allocated weekly for the following year.

The amount would offset cyclical drawdowns from periods of reduced volume and revenue.

Value-based triggers represent another solution highlighted by the report. Protocols explore dynamic allocation models where FDV-based approaches allocate higher buyback percentages when tokens are traded below certain valuation thresholds.

Time-weighted average price (TWAP) models triggered full buyback mode when the current price fell below the 30-day average.

These models attempted to create counter-cyclical buying patterns, though they introduced complexity and potential market signaling effects that could lead to perceived price ceilings.

Transparency Versus Efficiency Trade-Off in Recent Crypto news

The report noted that the strongest argument for programmatic at-the-market buybacks was not efficiency but transparency and alignment signaling.

A fixed percentage of protocol revenue, flowing directly to token buybacks, creates clear, auditable value transfer without discretionary decisions from centralized entities.

Yet, this transparency came with a premium. Protocols forfeited optimal timing and execution in exchange for predictable, trustless value distribution.

Regulatory considerations also favored programmatic approaches over discretionary buybacks that raised questions about information asymmetry.

Nevertheless, hybrid approaches remain possible for protocols with substantial treasuries.

The report mentioned Raydium’s treasury, which holds approximately $75 Million in non-RAY assets. The amount provides operational runway and strategic flexibility for discretionary deployment during market downturns alongside systematic buyback programs.

Since the application of buyback models in the current standard is new to the industry, protocols experimenting with these capital allocation strategies are building the playbook for mature token economics.

As the industry evolves beyond speculative phases toward sustainable value creation, experimentation will pave the way for greater efficiency. Positive crypto news of such developments sure contributes to the larger narrative of the space.