Lighter's LIT Token Rises 14% as Protocol Indicates Active Buyback

Lighter’s native token, LIT, rose 13.9% in the past 24 hours to trade at roughly $3.04 as of Monday. Onchain data and speculation suggested that the protocol may be buying back its token. The price increase was supported by Lighter's official acknowledgment via its X account that fees and protocol buybacks can be tracked using the treasury account in the block explorer.

The treasury account (Account #0) held 180,588 LIT as of 10:00 p.m. ET Monday, valued at about $548,987. The platform previously stated that revenues would be allocated between growth initiatives and token buybacks, depending on market conditions.

Lighter unveiled its native token last week, committing to allocate 50% of its 1 billion token supply to the ecosystem. Revenues from the platform and future products will be used for growth initiatives and potential token buybacks.

Why Did This Happen?

The rise in LIT’s price followed speculation that the protocol was actively buying back its tokens. The onchain treasury data showed an increase in LIT holdings, and Lighter's confirmation that fees and buybacks can be tracked via the treasury account bolstered the price movement.

Lighter launched its public mainnet in October and quickly became one of the most popular perpetuals exchanges. In December, it reported over $200 billion in monthly trade volume, outperforming competitors like Aster and Hyperliquid.

The platform recently raised $68 million at a $1.5 billion valuation, led by Founders Fund and Ribbit Capital. This capital injection has likely supported the protocol's buyback program and broader growth initiatives.

How Did Markets React?

The LIT token's price surge drew attention from the crypto community and traders. According to The Block's price page, the token's price climbed to $3.04 in the 24 hours leading up to the article's publication. The increase was attributed to the perceived activity of a token buyback, which could signal confidence in the token's long-term value.

Lighter addressed the speculation by referencing its earlier commitments to allocate revenues between ecosystem growth and token buybacks. The team stated that value created by all Lighter products and services will fully accrue to LIT holders.

What Are Analysts Watching Next?

The price surge raises questions about the effectiveness of token buybacks in aligning protocol value with token holders. The LIT token's 25% airdrop at token generation event (TGE) has already placed it in the hands of early users and ecosystem participants, with 250 million tokens in circulation out of a maximum 1 billion.

Analysts are likely to monitor the treasury account's activity and how frequently buybacks occur. The token's price behavior over the next few weeks will be crucial for determining whether the buyback strategy is having a lasting positive effect on the token's valuation and market sentiment.

The broader perps market remains highly competitive, with Lighter, Hyperliquid, Aster, and others vying for market share. The success of Lighter's buyback strategy may influence how other protocols allocate revenues and manage token supply in the future.