Speculative assets are paving the way for fundamental drivers
Fundamental investors are turning to token buybacks
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The current mood on Crypto Twitter: Speculation is dead and fundamental revenue drivers are back in.
“Speculation is dead” points to the increasing consensus that memecoins are a dying meta.
The straw that broke the camel’s back was of course the controversial LIBRA memecoin launch last month.
LIBRA peeled back the curtain on the explicitly extractive practices that memecoin projects exercise, such as sniping one’s own token quickly on launch.
Are memecoins dying though? Activity certainly isn’t at its all-time highs but the data suggests they’re far from death. Pump.fun launched 187k new tokens over the last week, while making $8.1 million in revenue.
Base memecoin launchpad Clanker even saw an all-time high in memecoin launches (10.8k) yesterday. It’s perhaps an anomaly, but it does cast some doubt on the idea that memecoins are a dying meta.
Besides, why would memecoins die?
Recall that memecoins were thought of as a casino game, what Dragonfly’s Haseeb Qureshi likened to a video game “simulacrum of crypto trading.”
It was a high-risk bet with very low guarantees of a return, but so long as blockchains are still permissionlessly accessible and human greed is a variable, the appetite for gambling will persist.
The case for fundamentals being back in play is perhaps more persuasive.
A great piece from Decentralised.co argues that revenue-generating apps/protocols will swing back in favor as capital allocators tighten their pursestrings and token attention is continually diluted.
With a glut of tokens on the market and no guarantee of the “rising tide lifts all boats” dynamic of past crypto cycles, investors need to be more selective about what tokens they purchase. So, they look to fundamental drivers.
Many prominent crypto companies are signaling the pivot back to “fundamentals” — to name a few, Jupiter, Hyperliquid, Raydium, Sky — by announcing token buybacks over the last few months.
Token buybacks are the TradFi-equivalent of “stock buybacks,” what is typically considered a more tax-efficient way than dividends to return value to shareholders. Some of the most successful companies in the 1970s and 1980s engaged in massive stock buyback campaigns, in a time where buybacks were considered extremely unpopular.
The canonical example is Teledyne. From 1972 to 1984, Teledyne’s CEO Henry Singleton bought back approximately 90% of the company’s outstanding shares.
The result: Teledyne’s stock massively outperformed the S&P 500 twelvefold by 1990.
But what worked for TradFi may not for DeFi.
Unlike most traditional businesses, some crypto products enjoy a relatively high ceiling for growth and expansion. Products like Aave or Uniswap, for instance, have had fairly sustainable revenue streams. Reinvesting capital into product expansion and user acquisition may yield greater returns than buybacks.
In that event, token buybacks don’t justify their costs, given easier routes to grow the business and create tokenholder value.
Not only is it a poor spend of capital, it signals that the business has no other avenues for growth.
Fundamentals may be back in, but don’t assume token buybacks are a one-size-fits-all solution.
Updated March 13, 2025 at 2:20 pm ET: Removed mention of Jito. While community members in Jito have proposed buybacks, Jito has not officially conducted any buybacks.
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