DeFi Buybacks in 2025: Are They a Sustainable Value Driver or Short-Term Hype?

The DeFi landscape in 2025 has been defined by aggressive token buybacks, with protocols like Aave, Hyperliquid, and MakerDAO (now Sky Protocol) allocating billions to repurchase their native tokens. While proponents argue these programs stabilize prices and enhance token utility, critics question whether they mask deeper structural weaknesses in DeFi's value proposition. This analysis evaluates the sustainability of these strategies, comparing Aave's disciplined approach with Hyperliquid's speculative bets and Sky Protocol's pivot to tokenomics-driven growth.

Aave: Structured Deflation and Real-World Integration

Aave's $50 million annual buyback program, approved by its DAO in 2025, represents one of the most methodical approaches in DeFi. By allocating weekly purchases of $250,000 to $1.75 million, Aave has reduced its circulating supply by over 94,000 tokens since May 2025, contributing to a 50% price surge during the pilot phase, according to a Coinotag report. However, the token's performance has since faltered, dropping below $200 amid broader market pressures, including the October 2025 flash crash, the Coinotag report notes.

Aave's tokenomics are bolstered by its integration of real-world assets (RWAs) through the Horizon market, which allows tokenized U.S. Treasury-backed funds like VanEck's VBILL to be used as collateral, as reported by CryptoTimes. This innovation attracts institutional liquidity while maintaining regulatory compliance, addressing a key pain point in DeFi. The protocol's multi-chain strategy and brand recognition further strengthen its fundamentals, with price predictions for 2027 ranging from $70 to $2,175 depending on market conditions, according to a TokenMetrics analysis.

Hyperliquid: Aggressive Buybacks and Uncertain Tokenomics

Hyperliquid's buyback program has been the most capital-intensive in 2025, with $644.64 million spent to repurchase 21.36 million HYPE tokens (2.1% of total supply) at an average price of $30.18, according to a CoinGecko research piece. This dwarfs Aave's program in absolute terms but raises questions about sustainability. The platform's treasury expansion strategy includes a $1 billion SEC-registered IPO, with proceeds allocated to accumulating HYPE tokens and staking rewards, as reported by CoinMarketCap. While this signals institutional confidence, it also highlights a heavy reliance on external capital to fund buybacks.

Hyperliquid's tokenomics are undergoing a radical overhaul, including a 45% supply reduction and the removal of its fixed 1 billion token cap, according to a CryptoSlate report. These changes aim to align the protocol with flexible issuance models like Ethereum and Solana but risk creating future inflationary pressures if not managed carefully. The platform's volatility is evident in the case of a "ZEC Long Whale" whose position shrank from $12 million to $200,000 in November 2025, underscoring the risks of leveraged trading, as noted in the CryptoSlate report.

Sky Protocol (MakerDAO): Tokenomics Overhaul and Treasury Rebalancing

Sky Protocol's Q3 2025 update marked a pivotal shift in its strategy. By increasing the daily USDS buyback limit to 300,000 and redirecting staking rewards from SKY→USDS to SKY→SKY, the protocol aims to boost token utility and reduce reliance on stablecoin yields, as reported by a Bitget article. A $500 million SKY allocation to its treasury further supports future reward distributions. However, the success of this strategy hinges on user adoption of the new staking model and the broader health of the Ethereum ecosystem, which remains a key determinant of SKY's price.

Treasury Dependency and Market Timing: A Double-Edged Sword

All three protocols face challenges in balancing treasury dependency with long-term growth. Aave's buybacks are funded by protocol revenue, ensuring alignment with user activity, while Hyperliquid's reliance on IPO proceeds introduces external risks, as noted in the CoinGecko research piece. Sky Protocol's treasury rebalancing is a middle ground but remains untested in prolonged bear markets.

Market timing also plays a critical role. Aave's token price is tightly correlated with ETH, amplifying gains during bull runs but exposing it to sharp corrections, as noted in the Coinotag report. Hyperliquid's focus on perpetual futures exposes it to liquidity shocks, as seen in the ZEC whale example, as noted in the CryptoSlate report. Sky Protocol's pivot to tokenomics-driven growth may insulate it from short-term volatility but requires time to materialize.

Tokenomics Design: The Long-Term Differentiator

Sustainable value creation in DeFi hinges on tokenomics that align incentives with protocol growth. Aave's deflationary mechanics and RWA integration create a flywheel effect, where reduced supply and institutional adoption drive demand. Hyperliquid's proposed supply reduction could stabilize HYPE's valuation but risks undermining flexibility in a rapidly evolving market, as noted in the CryptoSlate report. Sky Protocol's shift to SKY→SKY staking rewards is a step toward token-centric utility but lacks the immediate liquidity generation of Aave's RWA strategy, as reported by the Bitget article.

Conclusion: Buybacks as a Tool, Not a Panacea

DeFi buybacks in 2025 have proven effective in stabilizing token prices and signaling confidence, but their long-term value depends on underlying product-market fit and tokenomics design. Aave's structured approach and RWA integration position it as a leader in sustainable growth, while Hyperliquid's aggressive buybacks and uncertain tokenomics remain a mixed bag, as noted in the CryptoSlate report. Sky Protocol's pivot to tokenomics-driven value accrual is promising but unproven. For investors, the key takeaway is that buybacks are a tool, not a substitute for innovation and user adoption.