Bitwise Chief Investment Officer @Matt_Hougan has published a memo arguing that protocol revenue is becoming the primary driver of token value across crypto, and that markets have not yet pri
Bitwise Chief Investment Officer @Matt_Hougan has published a memo arguing that protocol revenue is becoming the primary driver of token value across crypto, and that markets have not yet priced in the shift. Hougan says crypto valuations outside Bitcoin could at least double as protocols increasingly connect revenue to native tokens through buybacks and burns, adding that investors have not fully priced in the move toward revenue-driven token economics.
In the memo, Hougan pointed to Hyperliquid, Uniswap, Aave, Pump.fun, and Lighter as examples of projects using fees or other protocol revenue to finance token purchases or burns.
Hyperliquid is the headline example. The decentralized exchange generated more than $800 million in revenue last year and uses roughly 99% of that revenue to buy and burn $HYPE. On Aug. 6, the protocol reported $169 million in second-quarter revenue and said it directed $141 million toward HYPE buybacks.Since launch, Hyperliquid has burned $1.3 billion worth of HYPE.
Uniswap followed a different path. The UNIfication proposal activated protocol fees for the largest decentralized exchange in crypto and burned millions of $UNI, transforming the token from a purely governance mechanism into a value-accruing asset.On December 28, 2025, approximately 100 million UNI were destroyed in a single transaction, valued between $590 million and $596 million at the time.The memo states Uniswap has since burned a further 7 million UNI and takes in roughly $100 million in annual revenue.
Pump.fun has also made significant progress on supply reduction. Pump.fun had burned $370 million of $PUMP by April 2026, equal to 36% of circulating supply, and has locked half of next year's net revenue into a buy-and-burn contract, with annual revenue put at $328 million.
Hougan expects more DeFi applications and layer-1 networks to adopt similar structures over the next 12 to 24 months.He ties the trend partly to a more permissive US regulatory environment that reduces friction for revenue-sharing features.
The argument is not without its limits, however. Hougan noted that token holders do not have the same legal rights to cash flows as traditional shareholders, and that many tokenomics structures can be modified by communities. Buyback and burn programs are not legally binding distributions, and burn rates remain closely tied to trading volumes that can move sharply with broader market sentiment.
Still, the direction of travel is becoming clearer. Crypto's valuation framework may be due for an update as more networks turn protocol revenue into token buybacks and burns, a shift that Hougan argues the market has not fully priced in.
Sources:Crypto.news: Bitwise CIO sees crypto valuations doubling on token revenueThe Crypto Times: Why Bitwise CIO Thinks Crypto Prices Are Too Low as Buybacks ExpandCoinDesk: Uniswap UNIfication Proposal Backed Overwhelmingly by Voters
