LIT Token Surges 13–37% as Lighter Launches Buyback Program to Reduce Supply

• Lighter’s LIT token has rebounded 37% since its January 1 all-time low as the protocol began using exchange fees for on-chain token buybacks.
• Over 181,000 LIT tokens have been repurchased at a cost of around $550,000, signaling the protocol's commitment to supporting token price stability.
• Whale activity, including a $4 million USDC deposit to purchase 1.28 million LIT tokens, and a wallet believed to belong to Tron founder Justin Sun holding 13.2 million LIT tokens worth nearly $40 million, indicate strong investor confidence.

Lighter has initiated a buyback program to reduce the circulating supply of LIT tokens using fees generated from its decentralized exchange (DEX) and future services. This strategy is designed to increase the token's value for holders by creating sustained buying pressure. The program channels 50% of protocol fees toward repurchasing LIT tokens,

aiming to reduce the circulating supply by up to 3%.

Whale activity has played a significant role in the token's price rebound, with large deposits and conversions contributing to renewed interest from both retail and institutional investors. For instance, one investor deposited $3.36 million in USDC to purchase 1.119 million LIT tokens, adding upward pressure to the price. These movements are expected to influence the token's price trajectory, especially with LIT's imminent listing on Coinbase.

What is the impact of Lighter's buyback program on the LIT token price?

The buyback program aims to boost investor confidence by reducing the circulating supply and increasing the token's value through on-chain repurchases. Over $1.35 million in USDC has been allocated for these buybacks, with projections suggesting up to 30 million LIT (3% of the total supply) could be repurchased. This strategy aligns with broader DeFi trends where token buybacks are used to create value for holders and reduce supply. The LIT token also serves as a governance and staking mechanism, enabling holders to propose and vote on protocol changes and access premium exchange features.

What role has whale activity played in the token's price movement?

Whale activity, including significant deposits and conversions, has contributed to the LIT token's price rebound and increased trading volume. For example, a wallet linked to Tron founder Justin Sun acquired 13.25 million LIT tokens, valued at approximately $33 million, giving him 5% control of the token's circulating supply. These actions demonstrate confidence in the token's long-term potential, despite its post-airdrop price volatility and competition from other DeFi perpetuals platforms.

Are there risks or limitations to the buyback program and whale activity?

While whale activity and the buyback program have driven the LIT token's price upward, some investors remain cautious about concentration risks. Large holdings by individuals like Justin Sun could influence market sentiment and token price if sold in bulk. Additionally, the token's post-airdrop price volatility highlights the inherent risks in DeFi markets. Furthermore, the buyback program's success depends on sustained fee revenues and continued investor participation, which may be subject to market fluctuations.

Despite these challenges, Lighter's strategy to reduce token supply through buybacks aligns with broader DeFi trends and aims to create value for token holders. The LIT token's dual role as a governance and staking token also enhances its utility, offering holders additional incentives beyond price appreciation.