Lighter (LIT) Initiates Treasury Buyback Program to Reduce Circulating Supply

• Lighter (LIT) launched a treasury buyback program, allocating 50% of protocol fees to on-chain token repurchases, aiming to reduce circulating supply by up to 3% according to reports.
• On-chain data revealed the platform's treasury account has accumulated more LIT tokens, which market participants interpreted as part of the buyback activity as reported.
• Lighter confirmed that the treasury account will reflect both protocol revenue and token buyback activity, which can be tracked on-chain as confirmed.

Lighter's LIT token surged 13.9% in the past 24 hours, reaching approximately $3.04 by Monday evening according to data. This price move followed speculation and subsequent confirmation that the protocol was engaging in token buybacks. On-chain data revealed that the platform's treasury account had accumulated more LIT tokens, which market participants interpreted as part of the buyback activity. Lighter later confirmed through an official post that the treasury account would reflect both protocol revenue and token buyback activity, which can be tracked on-chain.

The buyback program has already led to a 13–37% price surge in LIT and an 89% increase in trading volume to $36 million according to reports. Whale activity, including a $4.86M WBTC conversion to purchase 1.119 million LIT tokens, has further fueled trading volume and investor interest in the token. The treasury has already repurchased over 180,000 LIT tokens at a cost of around $550,000. Analysts note that this accumulation trend, combined with the reduction in supply, may sustain upward price momentum, particularly if buybacks continue at the current pace.

What Is the Purpose of the Treasury Buyback Program?

The primary objective of the treasury buyback program is to reduce the circulating supply of LIT by up to 3%, which aligns with broader DeFi trends of using tokenomics to stabilize and enhance value accrual according to reports. By allocating 50% of protocol fees to on-chain token repurchases, the platform aims to create sustained buying pressure tied directly to protocol usage. This strategy is designed to align incentives between the protocol and token holders, ensuring that value generated from the platform accrues to LIT holders.

What Do Market Participants Say About the Buyback?

Market participants have interpreted the buyback activity as a positive sign for the token's long-term potential as reported. Whale activity, including a $4 million USDC deposit to acquire 1.28 million LIT tokens, suggests strong investor confidence in the token. Analysts have noted that the buyback program creates sustained buying pressure, as it ties token demand directly to protocol usage. This dynamic could help maintain upward price momentum, especially if buybacks continue at the current pace.

What Are the Broader Implications of the Buyback?

The buyback program has broader implications for DeFi tokenomics and investor sentiment according to reports. By using a portion of the 1 billion total token supply to fund ecosystem expansion, the platform is signaling a long-term commitment to growth and tokenholder alignment. The transparency around buyback activity also reinforces trust in the protocol's governance model. However, the success of the buyback will depend on continued protocol usage and market conditions.

The platform has confirmed that "all value generated across Lighter's services accrues to LIT holders," reinforcing its long-term alignment with token holders as confirmed. This commitment is expected to enhance investor confidence and potentially attract new capital to the platform. The broader DeFi community has also taken note, with analysts suggesting that similar buyback strategies may become more common in the future.