The chief investment officer of Bitwise, Matt Hougan, has projected that cryptocurrency valuations have the potential to at least double. This growth, he argues, will be driven by an increasing trend of protocols using their revenue to finance token buybacks and burns. Hougan anticipates that these kinds of revenue-capture mechanisms will proliferate across decentralized finance (DeFi) applications and layer-1 networks within the next 12 to 24 months.

On Wednesday, Hougan elaborated that the cryptocurrency market, excluding Bitcoin, is transitioning into a model driven by revenue, where the value of a native token is directly influenced by network activity. He contended that this significant change has not yet been factored into market prices by investors, resulting in some crypto assets being undervalued.

Hougan suggested that creating stronger ties between a protocol's revenue and its token's value could provide investors with more conventional metrics for valuation. However, he also issued a caution, noting that unlike shareholders, token holders do not have legal claims to a project's cash flow. Furthermore, he pointed out that the tokenomics, which are set by the community, remain subject to change.

Protocols Embracing Revenue-Sharing

To illustrate his point, Hougan highlighted several protocols already implementing this model, including Hyperliquid, Uniswap, Aave, Pump.fun, and Lighter. These platforms are utilizing fees generated on their networks to either repurchase their native tokens or permanently remove them from circulation.

• Hyperliquid: The decentralized exchange generated more than $800 million in revenue last year and allocated approximately 99% of those funds to buy and burn its HYPE token. In a report on August 6, the protocol disclosed $169 million in revenue for the second quarter, with $141 million of that sum being channeled into HYPE buybacks.

• Uniswap: Similarly, Uniswap established a link between its revenue and its native token following the approval of its “UNIfication” overhaul. This change greenlit the activation of protocol fees, which will be used to finance UNI burns starting on December 22, 2025. The mechanism allows collected fees to be claimed through the burning of UNI tokens, thereby connecting protocol activity directly to a decrease in the token's circulating supply.

• Aave: In another instance, the Aave DAO's buyback program resulted in the purchase of over 205,000 AAVE tokens within its initial ten months of operation. Aave founder Stani Kulechov announced on June 25 that the team is developing an automated and non-discretionary mechanism for these buybacks. “100% of Aave Protocol and GHO revenue goes to the $AAVE token. This was established in the Aave Will Win proposal,” Kulechov wrote.

A Shifting Regulatory Landscape

The Bitwise CIO attributed this strategic shift toward revenue sharing to a more accommodating regulatory climate in the United States. He explained that for years, projects steered clear of such features due to concerns about violating securities laws. On August 5, Hougan stated his belief that existing regulatory guidance is sufficient to permit the continued expansion of the crypto sector, even in the absence of the CLARITY Act.