Crypto buybacks seem to be trending lately.
The general idea of buybacks, burning and staking is to reduce the circulating (market) supply and/or total supply which affects the supply/demand equilibrium of the crypto market. This in turn shapes market dynamics and influences price changes.
Organic demand for a token is primarily driven by it’s utility. People have a reason to HODL the token other than pure speculation (aka The Greater Fool Theory).
Buybacks
Crypto buybacks is where a protocol uses their revenue to buyback their token from the market. Generally the tokens can be
- added to their treasury
- burnt
- given out as rewards to users as in Brave Browser with their Brave Rewards (BAT).
Hyperliquid protocol leads the pack. Currently sending 97% of trading fees into automated open-market HYPE buybacks. Mainly through the Hyperliquid Assistance Fund. The tokens are then burned to reduce circulating and total supply. Which in turn support the token's price.
There is also HYPE staking available and the Grayscale HYPE Staking ETF. Which both reduce the circulating supply.
Sky protocol’s token utility is primarily as a community governance token. Also used for staking SKY in the Staking Engine to receive rewards for securing the network.
Sky Protocol’s buyback program was introduced in February 2025. It is powered by the Smart Burn Engine. This onchain module uses protocol surplus revenue to buyback SKY token at a rate controlled by Sky Governance and risk teams. This reduces the circulating and total supply.
In March 2026 Sky Protocol announced plans temporarily reduced buyback from 75% to 7.5% of its protocol surplus revenue. Sky plans to restore it to 25% once a solvency reserve is reached.
Burns
Around 2020, Decentralized Finance (DeFi) began using token burning mechanisms to manage supply and potentially increase token value.
Made popular by scammy DeFi projects like SafeMoon which featured a manual burn program. A hacker made off with $8.9 million worth of digital assets after exploiting a token burn bug in the smart contract. SafeMoon was launched in March 2021 with a total supply of 1 Trillion SFM tokens and a circulating supply of 556.62 billion tokens.
In 2019 Stellar Development Foundation burned 55 billion Lumen (XLM) tokens as it moved away from their airdrop programs. At the time Stellar was ranked #6
We were lucky to benefit from their airdrop program
- 2017 received 2 lots from Coinbase Earn (total 1 billion XLM gave away)
- 2017 received 2 lots from Blockchain.com wallet (total 500 million XLM gave away)
- 2019 messaging service Keybase planned to airdrop 2 billion XLM but only ran for 3 months due to large scale scam accounts. Only managed to have one account, so only got 3 months worth. Was meant to run for 20 months. Damn scammers spoilt it for us small time fraudulent account holders. Was still trying to work out a work around to open one for my wife
These type of burns reduced the total supply and come from the projects treasury.
Staking
Staking the protocols token helps secures the network. The staking reduces the available supply immediately. The staking rewards increases the circulating supply gradually over time.
Ethereum currently has about 30% of circulating supply staked, reducing the available (market) supply. EIP 1559 has been burning a portion of transaction fees since 2021, which reduces the total supply. In the case of Ethereum the total and circulating supply are 122 million ETH. Max supply is infinite.
DATs, ETFs and LTHers
These effectively do the same thing and reduce the circulating supply long term and create a one time demand.
Note:
For the purposes of this post have used the following definitions:
Available Supply
- the tokens that are actively liquid or market available.
- most price sensitive
Circulating Supply
- number of coins or tokens currently available to the public
- quoted on Coingecko and MarketCap
Max Supply
- number of coins coded to exist in the lifetime of the cryptocurrency
Organic Token Demand
Organic demand for a token is primarily driven by it’s utility. People have a reason to HODL the token other than pure speculation. For example we need to HOLD ETH to pay for transaction fees (gas). Thankfully the fees are no longer
DISCLAIMER: I promise no AI was harmed in the researching, editing and publishing of this (as much as I might have wanted to). But lots of CO2 was produced, doing my bit to make planet earth green.
I may have got a bit tongued tied with the available and circulating supply thing. Was trying to make a point not all circulating supply is created equal, hence the distinction. It may get changed after a couple of reads.
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