LIT Token Surges 13–16% as Lighter Launches Protocol Fee Buybacks

• Lighter's LIT token price increased 13–16% after the protocol activated a buyback program using fees to purchase tokens, reducing supply and signaling long-term value alignment according to Coinpedia.
• On-chain data shows the treasury and fund bought over 345,000 LIT tokens, contributing to rising demand and upward price pressure as reported by Yahoo Finance.
• Trading volume surged nearly 89% to $36 million in a 24-hour period, reflecting heightened market activity and investor interest in LIT according to MEXC data.

Lighter, a decentralized perpetuals exchange on Ethereum, announced that protocol fees would be used for token buybacks, triggering a 13% price rally in LIT. This move aims to reduce supply and align long-term investor goals with protocol growth according to TradingView. On-chain activity reveals the treasury spent USDC to purchase 180,700 LIT tokens, while the Lighter Assistance Fund added another 165,790 tokens. These transactions were transparently executed through a dedicated treasury account, confirming active buyback operations as Bitget reported.

The price surge coincided with a whale transaction involving $4.86 million in wrapped Bitcoin being converted to USDC and used to purchase over 1.119 million LIT tokens. This activity further reinforced the upward price movement according to AInvest analysis. Market participants also noted that the LIT token was trading above key short-term support levels, with RSI indicators suggesting potential for further gains as AInvest reported.

What Drives Confidence in LIT Token Price Movements?

Market confidence in LIT has been bolstered by Lighter's commitment to using fees for buybacks. The treasury account now holds over $548,000 worth of LIT tokens as of January 6, reinforcing the project's dedication to supporting token value according to Phemex. Additionally, Lighter's native token, LIT, was launched with a fixed supply of 1 billion tokens, of which 25% were airdropped to early users. This governance and utility token allows holders to propose and vote on protocol changes and access premium exchange features according to MEXC.

The LIT token price rally has also attracted institutional attention. A whale transaction involving a $2 million USDC deposit for 2.45 million LIT tokens and Justin Sun's $33 million acquisition of 13.25 million LIT tokens have increased the token's visibility in the DeFi space . Sun's move is seen as a strategic effort to stabilize post-launch volatility and influence market dynamics .

What Risks or Limitations Exist for LIT Token Holders?

Despite the positive momentum, some analysts caution that large whale activity could introduce volatility. For example, Justin Sun's recent $200,000 sale of LIT tokens has sparked debate over whether it signals bearish sentiment or strategic rebalancing . Additionally, LIT's low liquidity means even modest sales by large holders can amplify price swings, potentially impacting retail investors .

Market psychology also plays a role. Whale behavior, especially in low-liquidity tokens like LIT, often acts as a catalyst for broader sentiment shifts. For instance, the token's price dipped following technical issues on Arbitrum, highlighting the fragility of altcoin ecosystems . Analysts are closely monitoring these dynamics as LIT's TVL-to-market cap ratio of 2.08 suggests potential undervaluation relative to the secured value .

Justin Sun has also moved $5.4 million of LIT tokens from spot holdings to perpetual contracts, indicating a strategic hedge rather than a full exit . This move could provide additional flexibility in managing risk while maintaining a significant position in LIT. Market observers are keen to see if LIT can reclaim its $2.63 support level and stabilize its price movement .

How Does Lighter Compare to Other DeFi Protocols?

Lighter has positioned itself as a transparent protocol by making all buyback and fee tracking activities visible on-chain. This transparency is a key differentiator in a competitive DeFi space, where trust and accountability are critical for long-term growth . The protocol has previously secured $68 million in funding at a $1.5 billion valuation, with the mainnet launching in October 2024 .

By December 2025, Lighter had reported over $200 billion in monthly trading volume, demonstrating strong user adoption and protocol utility . The platform's approach to value capture—linking real usage to token demand—has drawn comparisons to other decentralized perpetual futures exchanges that combine speed, usability, and self-custody features .

Analysts are closely watching how frequently buybacks occur and whether they have a sustained effect on LIT's market price. Projections based on current revenue suggest the protocol could repurchase up to 30 million LIT tokens in the near future . As the market continues to evolve, the success of Lighter's buyback strategy will depend on maintaining strong liquidity and aligning token value with protocol growth .

Overall, the LIT token's trajectory will hinge on whether institutional confidence, whale activity, and protocol-driven buybacks can create a sustainable and stable market environment. For now, the market remains a tug-of-war between strategic accumulation and profit-taking, with Sun's actions serving as a microcosm of these forces .