The Diminishing Returns of Token Buybacks in DeFi: Lessons from Jupiter's JUP Reassessment

The DeFi landscape in 2026 is marked by a growing skepticism toward token buybacks, once hailed as a cornerstone of value accrual for crypto-native protocols. Jupiter's $70 million JUP buyback program-launched in 2025-has become a case study in the limitations of this strategy. Despite significant capital allocation, JUP's price remains 89% below its all-time high of $1.83, trading near $0.205 as of late 2025. This underperformance has prompted Jupiter's co-founder, Siong Ong, to question the efficacy of buybacks and propose redirecting funds toward user growth incentives and product innovation. The debate extends beyond Jupiter, with protocols like Hyperliquid and Pump.fun showcasing contrasting approaches and outcomes.

Jupiter's JUP Buyback: A Cautionary Tale

Jupiter's buyback program, which allocated up to 50% of protocol fees to repurchases and locked tokens for three years, initially aimed to reduce supply and signal confidence in the token's long-term value. However, the lack of price response has led to a strategic reassessment. According to a report by CoinPedia, the platform slashed its JUP airdrop from 700 million to 200 million tokens to mitigate selling pressure, with 175 million reserved for active users and 25 million for stakers. This shift reflects a broader industry trend: founders increasingly prioritizing growth over short-term token price manipulation.

Community feedback has been polarized. While some users highlight bullish technical setups and innovations like Mobile V3, others criticize the tokenomics, fearing inflation from airdrops and staking rewards. Jupiter's CTO has framed the buyback program as a "waste of resources" if it fails to drive adoption. This sentiment aligns with Helium CEO Amir Haleem, who suspended HNT buybacks in 2025 due to minimal market impact.

Contrasting Strategies: Hyperliquid and Pump.fun

Hyperliquid, a decentralized perpetual futures exchange, allocated 90% of its August 2025 fee revenue ($106 million) to HYPE buybacks, reducing circulating supply by ~9% and pushing the token to $60. By November 2025, its Assistance Fund had spent $644.64 million on buybacks, accounting for 46% of all token buyback spending in the year. However, this success is shadowed by an impending $12 billion HYPE token unlock, which could destabilize gains.

Pump.fun, a meme token issuance platform, adopted an even more aggressive approach, using 99.1% of daily revenue-peaking at $3.38 million in September 2025-for PUMP buybacks. This reduced circulating supply by 7.5% and repurchased 13.86% of total supply, with $138.17 million spent since July 2025. Yet, Pump.fun's model is inherently volatile, relying on cyclical meme coin trends and facing a $5.5 billion lawsuit alleging illegal gambling.

The Buyback Paradox: Scarcity vs. Utility

The divergent outcomes highlight a critical tension in DeFi: whether token value is derived from artificial scarcity or network utility. Jupiter's struggles underscore the limitations of buybacks in isolation. As Siong Ong noted, "Buybacks alone cannot drive adoption if the product isn't compelling". Redirecting capital to user incentives-such as staking rewards or protocol asset claims-could align token value with ecosystem growth.

Hyperliquid and Pump.fun, meanwhile, demonstrate that buybacks can work when paired with robust revenue streams. Hyperliquid's $1.35 billion in annualized fees and Pump.fun's speculative appeal provide the liquidity needed to sustain buyback-driven price action. However, these models also expose vulnerabilities: Hyperliquid's token unlock and Pump.fun's legal risks illustrate the fragility of buyback-centric strategies.

Community Sentiment and the Path Forward

Community feedback on Jupiter's buyback reassessment is telling. While some argue buybacks are essential for signaling protocol health, others advocate for growth incentives to stimulate adoption. Suggestions from industry experts like Anatoly Yakovenko and Kyle Samani include staking rewards and protocol asset claims to incentivize long-term holders. Jupiter's pivot toward a broader DeFi super-app-with $369 million in cumulative revenue-suggests a recognition that token price alone is not the ultimate metric of success.

Conclusion: Buybacks as a Tool, Not a Panacea

In 2026, token buybacks remain a double-edged sword. For protocols like Hyperliquid and Pump.fun, they have proven effective in creating short-term scarcity and aligning incentives. However, Jupiter's experience cautions against overreliance on buybacks without complementary growth strategies. As DeFi matures, the focus is shifting from token price manipulation to sustainable user acquisition, product innovation, and network utility.

The lesson is clear: buybacks are a tool, not a panacea. In an evolving landscape, their efficacy depends on how they are integrated into a broader value proposition. For Jupiter and others, the path forward lies in balancing capital efficiency with growth incentives-a strategy that may redefine DeFi's approach to tokenomics in the years ahead.