For years, crypto projects have launched tokens, often in the name of governance or network security. With this model, token holders have the right to vote on proposals and guide the future of a project in the spirit of decentralization.
Yet oftentimes, these tokens are hardly doing anything meaningful for the value of a project. And it’s probably an outdated way to think about issuing cryptocurrencies in 2025. Recent market activities make it clear that tokens need some kind of utility and buyback/burn strategy to create value.
Flaws in the Spirit of Decentralization
Tons of blockchain projects have launched tokens – even if having a cryptocurrency wasn’t necessarily core to its focus.
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There are certainly underlying business reasons for this. This includes the fact that tokens when initially listed on exchanges can have serious upside value.
Many projects launch tokens in the spirit of enhancing decentralization or to give the community associated with it a voice – noble efforts to increase distribution and participation.
However, this can also result in community quagmires. One recent example of this comes from Across protocol. An affiliated entity of the project, Risk Labs, reportedly manipulated its DAO governance to take $23 million in tokens to fund future operations.
Risk Labs’ CEO Hart Lambur refuted any claims of manipulation with colorfully-titled Twitter/X article, claiming the accusations were motivated by a competitor.
Regardless of who’s right or wrong in this case, it highlights the fact that perhaps the DAO model may be outdated.
The Pioneer is BNB?
Despite many controversies, Binance’s BNB standsout as a model of utility.
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Originally called Binance Coin and launched in 2017 during the height of the Ethereum ICO era, BNB was initally an Ethereum ERC-20 token.
In 2019, BNB was migrated over to the Binance Smart Chain platform.
At its outset, BNB developers had utility in mind. That’s why it performed different from most cryptocurrencies – an outlier when launched in 2017.
From exchange users getting a 25% discount on trading fees on Binance to dust conversion from smaller untradable amounts of crypto into BNB, the token has real use in its own ecosystem.
Binance burns BNB based on the exchange’s trading volumes. According to BNBBurn.info, over 62 million BNB has been burned out of an original circulation of 202 million, which is a 31% reduction in its overall supply.
Utility and burns have likely helped BNB to a record-high in terms of price of the token, hitting $1,000 in September.
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HYPE and PUMP Following BNB Model
There are other crypto projects that are clearly taking heed from the success of BNB.
Hyperliquid, the perpetual and spot decentralized exchange built on its own blockchain and EVM-compliant smart contract system called HyperEVM, also burns its tokens.
The HYPE cryptocurrency is the only way to pay for platform fees, and are automatically burned.
While Hyperliquid is facing competition from Binance-backed Aster DEX and others, its token has still held up well, with an over 500% appreciation since launch.
The memecoin launchpad Pump.fun, which conducted an ICO over the summer, raising $500 million, is another example of buybacks serving the project well.
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Pump.fun has been a huge moneymaker in crypto, generating over $800 million in fees as traders FOMO into various memecoins on the platform.
Also, Pump buys back its token. It has already purchased over $114 million of the cryptocurrency since July’s launch.
Sell pressure as a result of the ICO has likely led to PUMP token price at a level similar to its launch.
However, the token has only been available on exchanges since July. It might still be early to draw conclusions on PUMP’s performance for the time being.
Future Tokens
Tokens need to have a real use within an ecosystem, and a reduction of supply in the form of buyback/burn overall can reduce selling pressure.
Projects like BNB, HYPE and PUMP are clear use cases for projects and investors to keep in mind going forward.
Increased Wall Street interest in the crypto market is on the rise. And performance of a token is a true measure of the merit of many blockchain projects, just like a stock price in traditional finance.
As new tokens like MetaMask, Base and others come to market, the communities surrounding them should advocate for the utility and buyback/burn model to ensure both sustainability as well as long-term performance.
