Why tokenomics and buybacks in 2025 hold the key to altcoins’ future performance
Altcoins have struggled to deliver the explosive gains many investors expected in recent years, raising the question: why? One major factor is tokenomics, especially token unlocks and buyback strategies that influence supply and demand dynamics. In this article, we break down insights from Tokconomist’s Annual Report 2025 to clarify how token unlocks have shaped altcoin prices. You’ll learn why massive buybacks like those by OKX’s OKB token caused sharp rallies, how different buyback models affect supply differently, and what this means for altcoin investors in 2026. ---
Why Altcoins Underperformed: The Role of Token Unlocks and Buybacks
Altcoins seemed poised for big gains in 2025, but many portfolios shrank instead. The culprit? Complex tokenomics, especially token unlocks releasing large token supplies into circulation, increasing selling pressure. However, 2025 also saw a surge in token buybacks — when projects repurchase and “burn” tokens to reduce supply and increase value.
According to Tokconomist’s report, token buybacks in 2025 reached an astounding $8.1 billion — up 145% from $3.3 billion in 2024. OKX’s native token OKB dominated this trend, accounting for 79% of buybacks, followed by Hyperliquid’s HYPE at 8%. Even excluding OKB, buybacks rose five-fold from $70 million in January to $350 million in October.
What Is a Token Unlock?
A token unlock is when previously locked tokens become available for trading. Large unlocks increase circulating supply, often putting downward pressure on price.
Answer Box: What impact do token buybacks have on altcoin prices?
Token buybacks reduce circulating supply by repurchasing tokens and sometimes burning them, creating scarcity which can boost prices. However, the effectiveness depends on the buyback’s funding source (revenue vs treasury funds) and whether token emissions (new tokens entering circulation) outpace buybacks.
Different Buyback Models: What Works and What Doesn’t
Not all buybacks affect prices equally. The Tokconomist report analyzes five buyback methods over 90 days:
- Revenue-funded buybacks and burns led to an average 73% token price increase.
- Revenue-funded buybacks returning tokens to treasury saw 61% gains.
- Treasury-funded buybacks correlated with a 33% price drop.
- Projects using mixed sources (revenue, fees, treasury) fell about 52% on average.
Why such differences? Buybacks fueled directly by steady revenue are sustainable and signal project maturity. Treasury-funded buybacks rely on finite cash reserves and may indicate cash flow problems if overused.
Key Insight
Buybacks only matter if they offset token emissions. OKB achieved a 46% deflation rate in 2025 by pairing massive revenue-funded buybacks with zero emissions. By contrast, Ethereum bought back 2% of its supply but issued 64% more tokens, leading to 62% inflation — still net supply growth that can weigh on price.
Notable Buyback Success Stories of 2025
- OKB (OKX) burned 93% of its supply—one of crypto’s largest burns ever—dropping total supply to 21 million tokens, mirroring Bitcoin’s scarcity model. Buybacks were entirely funded by protocol revenue, driving OKB’s price up approximately 300% within days.
- Hyperliquid (HYPE) dedicated 97% of trading fee revenue to continuous buybacks and burns. With a hard cap of 1 billion tokens, this created intense deflationary pressure.
- Aave (AAVE) initiated $50 million in annual buybacks targeting liquidity providers and stakers. While it didn’t prompt massive short-term price jumps, its model distributes buybacks as ecosystem rewards that sustainably attract users.
Evolving Token Burn Mechanics: Beyond Short-Term Hype
Burns used to focus on pumping price by cutting supply quickly. In 2025, projects innovated with burns to build lasting growth:
- Revenue-based burns: Predictable and tied to actual income, but potentially invite regulatory scrutiny as they resemble stock buybacks.
- Algorithmic treasury burns: Less predictable but reduce regulatory risk by burning tokens held in treasury automatically.
- Governance-driven burns: Token holders vote to burn tokens, offering decentralization and transparency, but also uncertainty since votes may reverse burns in the future.
Exchange Tokens Leading the Burn Wave
- BNB (Binance Coin) burned $4.7 billion, cutting supply by 3% with zero net emissions—pure deflation.
- BGB (Bitget) burned over $1.3 billion, trimming supply by 15%, though new emissions offset some of that for a net 3% deflation.
Even Ethereum intensified burning, removing around $280 million worth of tokens, but token issuance still outpaced burns leading to inflation.
Data Callout: Buybacks Are Growing Fast but Must Beat Emissions to Impact Price
| Year | Total Buybacks (USD) | % Increase YoY | Notable Project Dominance |
|---|---|---|---|
| 2024 | $3.3 billion | — | — |
| 2025 | $8.1 billion | +145% | OKB (79% of buybacks) |
Steady revenue-backed buybacks combined with low or zero emissions create deflation, boosting scarcity for token holders.
Risks: What Could Go Wrong With Buybacks and Tokenomics?
- Treasury depletion: Projects relying heavily on treasury funds for buybacks risk running out of cash.
- Regulatory scrutiny: Revenue-funded buybacks resemble stock buybacks attracting securities law attention.
- Emission outpacing: If new tokens flood the market faster than buybacks and burns, inflation dilutes value.
- Market dependency: Buybacks can trigger short-term rallies but may fail without fundamental adoption or growth.
- Governance reversals: Community-driven burns risk reversal via future votes increasing token supply.
Actionable Summary
- Token unlocks released large supplies in 2025, pressuring altcoin prices.
- Buybacks jumped dramatically in 2025, with OKB leading a $8.1 billion buyback wave.
- Revenue-funded buybacks and burns are more effective and sustainable than treasury-funded methods.
- Deflationary pressure happens only if buybacks outpace emissions; otherwise, supply growth dilutes value.
- Evolving burn models — revenue-based, algorithmic, governance-driven — aim for long-term tokenomics health, not just hype.
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Frequently Asked Questions (FAQs)
Q1: What is a token buyback and why does it matter?
A token buyback is when a project repurchases its own tokens from the market, often followed by burning (destroying them). This reduces circulating supply, can create scarcity, and potentially boosts token value if done sustainably.
Q2: How do token unlocks affect altcoin prices?
Token unlocks increase circulating supply as locked tokens become tradeable, often leading to selling pressure and price declines unless balanced by demand or buybacks.
Q3: Why are revenue-funded buybacks more effective than treasury-funded?
Revenue-funded buybacks use ongoing income, making them sustainable and aligned with project growth. Treasury-funded buybacks burn through finite reserves and may signal financial stress.
Q4: Can token burns cause regulatory issues?
Yes, revenue-based buybacks and burns can attract regulatory scrutiny since they resemble stock buybacks, potentially classifying tokens as securities in some jurisdictions.
Q5: Will buybacks guarantee altcoin price increases in 2026?
No. Buybacks help control supply but don’t guarantee price gains without strong adoption, demand, and careful management of token emissions.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always conduct your own research before investing.
By Wolfy Wealth - Empowering crypto investors since 2016
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