Original article by Marco Manoppo , Investor at Primitive Ventures
Compiled by Odaily Planet Daily ( @OdailyChina )
Translator: CryptoLeo ( @LeoAndCrypto )
Editors note: Last week, Marc Zeller, founder of Aave Chan Initiative (ACI), a contribution team of Aave DAO, put forward a new proposal, which is also known as the most important proposal in Aaves history. In addition to optimizing the protocol security mechanism, the focus of everyones attention is on the proposed Anti-GHO mechanism and AAVE repurchase plan, both of which can increase the value accumulation of token holders and lay the foundation for the long-term development of its protocol, the accumulation of token value and the introduction of more users.
In the context of regulatory relaxation, in addition to AAVE, several other mainstream DeFi protocols have also been committed to exploring ways to accelerate the value accumulation of token holders, including Jupiter, Hyperliquid, and ethena. Primitive Ventures investor Marco Manoppo summarized several mainstream DeFi protocols that have accelerated the value accumulation of token holders in recent times, and Odaily compiled them as follows~
DeFi protocols are facing increasing pressure to reward token holders with a portion of their revenue, with major players like Aave, Ethena and Hyperliquid already exploring ways to pilot value accrual for their tokens.
The key driver behind this shift is Trump’s election victory, which has brought a more friendly regulatory environment to DeFi. Here’s a breakdown of the latest token economics updates from Aave, Athena, Jupiter, and Hyperliquid, including their buyback programs and fee shifts.
Aave
Aave has just launched a major token economics update that focuses on buybacks, fee distribution, and incentives for token holders. According to Marc Zeller, founder of the Aave Chan Initiative (ACI), this is one of the largest proposals in Aaves history. See Aave Economic Model Innovation: Anti-GHO Mechanism + Token Buyback .
Buybacks and fee conversions
Aave has launched a six-month buyback program, allocating $1 million per week (about $4 million per month) to control AAVE inflation and make the protocol more sustainable. After six months, the buyback pool may reach $100 million (about 3% of the circulating supply), with the DAO deciding the deployment speed. The goal is to control token inflation while strengthening the Aave treasury.
New financial and governance initiatives
Aave is setting up the Aave Finance Committee (AFC) to handle treasury and liquidity strategies. The plan also completed the transition from LEND to recycle 320,000 AAVE (about $65 million) for potential future use cases.
Umbrella: Aave’s new risk management system
Aave spends $27 million per year on liquidity costs, so they launched Umbrella, a system to optimize capital efficiency and reduce risk that will integrate multiple blockchains including Ethereum, Avalanche, Arbitrum, Gnosis, and Base.
Anti-GHO Mechanism: New Rewards for Stablecoin Holders
A new reward mechanism, Anti-GHO, will replace the old discount model for GHO holders. These tokens can be burned at a 1:1 ratio to offset GHO debt, or redeemed for StkGHO, thus directly tying incentives to Aave revenue.
It’s still under development and may be part of a future “Aavenomics Part 2” update.
What does the future hold?
This update lays the foundation for larger, more sustainable buybacks in the future with Aave v4, more chain deployments, and additional revenue streams from Chainlink’s SVR.
Jupiter
Jupiter has begun using 50% of its protocol fees to buy back JUP tokens, which will be locked for three years starting February 17, 2025. The program is designed to reduce the circulating supply, enhance long-term stability, and increase participation in the Solana ecosystem.
In February, Jupiter conducted its first buyback, acquiring approximately 4.885 million JUP, equivalent to approximately $3.33 million. Currently, Jupiters Litterbox Trust buyback program has exceeded 10 million JUP (approximately $6 million).
What does the future hold?
Calculated on an annual basis, a repurchase of $3.33 million means an annual repurchase of more than $35 million. Based on the data, Jupiters revenue in 2024 is $102 million, which means $50 million will be used for token repurchases.
Hyperliquid
Hyperliquids HYPE supply is 1 billion, with no investor allocation. The specific allocation is as follows:
31.0%: airdropped to early users (full liquidity);
38.888%: used for future token emission and community rewards;
23.8%: Team allocation, locked for 1 year, most vesting between 2027-2028;
6.0% ：Foundation;
0.3% ：Community contribution;
0.012% : HIP-2.
The team to community ratio is 3:7, and the largest non-team holder is the Assistance Fund (AF), holding 1.16% of the total supply and 3.74% of the circulating supply.
Revenue Model and Buybacks
Hyperliquids revenue mainly comes from transaction fees (spot and derivatives) and HIP-1 auction fees. Since Hyperliquid L1 does not charge gas fees yet, gas-related revenue is not included.
Income Distribution:
46% of perpetual contract fees go to HLP holders (supply-side incentive);
54% is used for HYPE buybacks through the Assistance Fund (AF).
Additional revenue sources include HIP-1 auction fees and spot trading fees (USDC trading fees), both of which are currently allocated as HYPE buybacks.
In short, Hyperliquid implements a dual token deflation strategy for HYPE:
Buyback - AF uses part of the revenue to buy back HYPE tokens from the market. These tokens are held by AF and will not be destroyed;
Destruction - All spot trading fees paid in HYPE (such as the HYPE/USDC trading pair) will be destroyed, and all gas fees on HyperEVM (once fully launched on the mainnet) will be paid in HYPE and destroyed.
Buyback Impact and Staking
There are a number of publicly available data sources regarding Hyperliquid fees, and using data through March 2025, AF drives monthly repurchase volume of ~$2.5M in HYPE (or ~$35M) by using 54% of perp volume.
HYPE staking was launched on December 30, 2024, offering an annual yield of approximately 2.5% based on PoS rewards, modeled after Ethereum.
Currently, 30 million of the tokens held by users (not including the 300 million tokens held by the team/foundation) are staked.
What does the future hold?
Hyperliquid could introduce a fee-sharing model where a portion of on-chain transaction fees are distributed directly to HYPE holders, creating a more sustainable and rewarding ecosystem — although one could argue that the current model also creates more of a flywheel of revenue, both for good and for ill.
Hyperliquid earns fees through trading and HIP-1 auctions, and future sources of revenue include HyperEVM transactions. Instead of using all fees for buybacks or incentives, a portion of them can be used for:
Providing rewards to holders based on their HYPE holdings and staked amounts;
Reward long-term participants and promote deeper engagement;
It is kept in the community treasury and the governance body decides how to use it.
Possible distribution models:
Direct fee sharing — a portion of trading fees is converted to USDC (or retained as HYPE) and distributed periodically, just like a dividend;
Staking boost rewards - only users who stake HYPE can get benefits, and rewards are given for long-term holding;
Hybrid model - a combination of fee redistribution and HYPE buybacks to balance price support and incentives.
Ethena
Ethena Labs is now one of the top 5 DeFi protocols by TVL, with revenue exceeding $300 million. As revenue grows, Wintermute’s proposal to enable ENA fee conversion has been approved by the Ethena Risk Committee.
Currently, 824 million ENA (US$324 million) has been staked, accounting for 5.5% of the total supply, but stakers can only receive point rewards and unclaimed ENA airdrops, but cannot profit from Ethena protocol revenue.
Enabling the fee switching proposal will give stakers direct access to protocol revenue and strengthen DAO governance by aligning incentives with ENA holders.
Ethena makes money mainly by obtaining the contract market funding rate. Currently, 100% of the income belongs to the USDe stakers and the reserve fund. In the past three months, the monthly income has averaged US$50 million.
Preparation before cost conversion
The Ethena Risk Committee sets five key benchmarks to ensure Ethena is in a solid position before sharing proceeds.
Current progress on these indicators:
Not reached
USDe supply target: 6 billion, only 9% away from the target (current supply is about 5.4 billion);
Exchange successor: Binance/OKX, no exact time yet, but Binance currently holds 4 million USDe;
The APY spread between sUSDe and sUSDS is ≥ 5%. The spread has narrowed due to the market downturn, but may widen again.
· Achieved
Cumulative revenue: more than $250 million - surpassed this figure in January and has now reached $330 million. ;
Reserve fund ratio ≥ 1% of USDDe supply - With $61 million in reserves, Ethena can now support $6.1 billion.
What does the future hold?
Ethena is close to achieving its goal, but the fee conversion will be temporarily put on hold until all benchmarks are met. In the meantime, the team focuses on increasing the supply of USDe, securing more exchange integrations, and monitoring market conditions, and once everything is in place, ENA stakers can start benefiting from the revenue sharing model.
Summarize
Mainstream DeFi protocols are accelerating the accumulation of value for token holders. Aave, Ethena, Hyperliquid, and Jupiter are all accelerating buyback programs, fee conversions, and new incentive structures to make their tokens more valuable, not just speculative.
This trend reflects a broader industry movement toward sustainable token economics, where projects focus on real revenue distribution rather than inflationary incentives.
Aave is leveraging its deep reserves to support buybacks and governance improvements, Ethena is working on enabling direct revenue sharing for stakers, Hyperliquid is optimizing its buyback and fee distribution model, and Jupiter is locking up buyback tokens to stabilize supply.
As regulatory conditions become more favorable and DeFi continues to mature, protocols that successfully align incentives with their communities will thrive.
