Author: Dougie, Member of Figment Capital

Compiled by: Felix, PANews

Over the past year or so, buybacks have become a mainstream topic in discussions about rising token prices. For almost every question raised by the community regarding governance models, buybacks have become the default option: When to buy back? Why not buy back more? Does the team really care about their tokens? What is truly interesting is not that buybacks have suddenly become popular, but why they have become popular. The rise of buybacks is not because they are obviously the optimal mechanism, but because the entire market's trust in token design has completely collapsed.

The crypto industry has long demanded that token holders and investors view tokens as abstract representations of "governance" or "governance models," without granting any enforceable rights or transparently disclosing the use of treasury funds. The legal divide between foundations and development labs has created a murky chain of accountability. The size of the treasury continues to grow, budgets are never made public, expenditures are rarely justified, and investors are expected to believe that all funds are "used for growth."

After a series of misconducts, trust has gradually eroded. In this context, buybacks do not emerge as a complex capital allocation strategy, but rather as the simplest and most intuitive gesture the team can make to indicate, "We stand with you, we will not waste the treasury, and we will reinvest the money into the tokens." This can be said to be the closest initiative to "fiduciary duty" in the market so far.

The most concentrated embodiment of this dynamic is Hyperliquid, which has quickly become the benchmark for commitments to token holders in the industry. However, what is often overlooked in discussions is why Hyperliquid's model works and why almost no one can replicate it. Hyperliquid has never engaged in external financing. From its inception, it has built the entire protocol entirely independently, found product-market fit early on, generated substantial revenue, and did so without token issuance or liquidity subsidies (except for airdrops); while keeping its cost structure close to zero. They have achieved a financial advantage that almost no other protocol can match: having more money than they can spend. In this case, buybacks are not a growth strategy but a reasonable release valve—returning excess funds because marginal spending hardly drives the business. For Hyperliquid, buybacks are primarily a successful byproduct, although they further amplify success, they are by no means the root of that success.

However, many teams view buybacks as the reason for Hyperliquid's success rather than the result. This confusion has led to a distorted adoption of buybacks in the field. In traditional markets, buybacks typically occur later in a company's lifecycle: only after R&D, market expansion, and acquisitions have saturated, and when the marginal returns on reinvestment decline. High-growth companies like Amazon, Nvidia (before 2022), and Meta during their rapid growth periods would invest every available dollar into future possibilities. They would not use funds for buybacks, as that would limit growth. The trend of buybacks in the crypto space has inverted this logic. The market no longer sees buybacks as a "privilege earned," but rather as a basic expectation, even for protocols still searching for product-market fit.

Buybacks Expose Deeper Issues: Unclear Rights of Token Holders

In events such as the recent acquisition of Vector by Coinbase, the long-standing ambiguity surrounding the rights of token holders has become increasingly evident. The TNSR token of Tensor was not originally intended to represent ownership of the company, yet many holders assumed that they should share in the acquisition profits. When they found themselves excluded, dissatisfaction erupted, not because Tensor did anything wrong, but because the entire ecosystem has conditioned token holders to expect value through "implication" rather than "explicit stipulation." This incident does not indicate a failure of a particular project, but rather reveals a failure in the cultural norms of the crypto ecosystem regarding token rights. Buybacks have devolved into a way to symbolize value appreciation, yet have not clarified the rights that token holders should enjoy. Tensor chose clarity over ambiguity, and the reactions that followed indicate how rare such clarity is.

MetaDAO as the Counterpart: Ownership, Clarity, and Market Governance

In this context, MetaDAO has emerged as a distinctly different approach, resonating with an increasing number of builders and investors precisely because of its clarity.

MetaDAO is not merely "the practice of Futarchy," but a framework for issuing tokens, where the team issues tokens with a transparent sales structure, allocates a portion of tokens to the treasury, and from day one, treats tokens as the sole unit of ownership, with no equity layer, no ambiguity, on-chain treasury income, and unlocking rules that align with community interests. The governance structure is designed to allow token holders to have substantial control over decision-making. At the same time, the system increasingly leverages market-based decision-making mechanisms—adopting Futarchy for specific issues like capital allocation, objectively assessing outcomes through prediction markets.

(Related reading: Futarchy: When Prediction Markets Become Governance Tools, a Governance Experiment Disrupting DAO Decision-Making Paradigms)

The appeal of MetaDAO lies in its provision of a model where the flow of value, ownership rights, and incentive mechanisms are completely transparent (rather than relying solely on implication). Buyers know exactly what they are purchasing. The team knows exactly what they are relinquishing. Token holders understand how decisions are made. In many ways, MetaDAO achieves the clarity that the original buyback mechanism aimed to "approximate."

However, just as Hyperliquid should not be blindly emulated by all projects, MetaDAO should not be universally replicated. It is precisely those characteristics that make MetaDAO so appealing—such as community-controlled treasuries, clear ownership tokens, and decentralized decision-making—that many early-stage startups find unacceptable. Finding product-market fit (PMF) requires speed, and rapid trial and error necessitates unilateral decision-making power. Many teams do not wish to outsource strategy to governance, prediction markets, or token holder voting, nor should they. The Futarchy mechanism only demonstrates its powerful capabilities when a protocol has clear KPIs and predictable feedback loops; but when teams are still exploring the market, refining products, and iterating at the speed necessary for survival, such mechanisms can become cumbersome and unwieldy.

Unified Insight: The Success of Hyperliquid and MetaDAO Lies in Their Transparency

For this reason, it is necessary to take a step back and consider what Hyperliquid and MetaDAO reveal. On the surface, the two concepts seem diametrically opposed: one is a more centralized buyback mechanism, while the other is a decentralized ownership mechanism. However, at a deeper level, they reveal the same fundamental truth: both models are effective because they provide clear rules. Hyperliquid clearly communicates to the public how value is returned to token holders; MetaDAO explicitly defines what token holders own and how decisions are made. The fundamental reason for the success of both is that token holders understand the rules of the game.

This clarity stands in stark contrast to the ambiguity and opacity that pervade the current token ecosystem. Before the SEC mandated standardized information disclosure in the 1930s, publicly traded stocks often traded at significant discounts due to investors' distrust of company disclosures. At that time, the market did not crave buybacks; it craved information. The current crypto industry is in a similar "pre-transparency era": treasuries are opaque, budgets are vague, returns on fund expenditures are almost never disclosed, governance is formal rather than substantive, and tokens rarely clarify rights. The result is evident: issuance feels like taxation, fee rates feel like taxation, and treasury expenditures also feel like taxation. Token holders can only "resist" in one way—by selling.

This is precisely why buybacks feel good, and why MetaDAO feels good—both significantly reduce ambiguity, making everything readable and understandable, thereby rebuilding trust.

Transparency, Not a Specific Mechanism, is the Cornerstone of a Healthy Token Economy

However, neither of these mechanisms is universal, nor should they be treated as dogma. The real lesson to be learned from the past year is not that "buybacks are the only future" or "Futarchy is the only future," but that transparency is the future. The industry must stop chasing the so-called "one true orthodoxy" of token design and instead establish a culture where project teams must clearly communicate to the market: how funds are used, what rights token holders actually have, and how the protocol intends to develop. Traditional financial markets have addressed this issue through standardized financial reports, shareholder letters, and regulatory requirements; the crypto world can solve this through on-chain accounting, public treasuries, predictable token allocation rhythms, clear rights declarations, and governance that matches actual control (whether centralized or decentralized).

Hyperliquid and MetaDAO are not "standard" models. They are simply well-suited to their specific models, maturity levels, and incentive mechanisms. Hyperliquid succeeds because it can launch without external funding, achieve exceptionally high revenue early on, and operate at an unmatched speed. MetaDAO succeeds because it defines ownership around tokens from the very beginning and grants the community true control over the treasury and roadmap. These two approaches are not competing doctrines but important case studies on how the flow of value aligns with the underlying structure and needs of the projects.

Conclusion: Transparency Over Dogma

The true future of token design will never be that every protocol adopts a buyback mechanism, nor that every decision is governed by Futarchy. The real future is one where project teams choose the appropriate mechanisms based on their needs, and investors reward those teams that maintain transparency about how those mechanisms operate. A healthy token economy is never built on a single model, but rather on clarity, transparency, and wise choices.

When teams openly share how they invest in their own development, what token holders can gain, and why their design choices matter to the business, the market can finally play its rightful role: assessing competitiveness and predicting outcomes.

This is the true goal that the next era of the crypto industry should pursue—far more important than one-size-fits-all buybacks or universal Futarchy.

Related reading: Which Should Token Holders Choose? Buyback and Burn or Dividends to Open a New Game of Token Appreciation

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