Decentralized Finance protocol accelerates the accumulation of value for Token holders

Recently, several major DeFi protocols are actively exploring how to introduce value accumulation mechanisms for native tokens in response to the demands of token holders for revenue distribution. This trend reflects the overall shift of the industry towards sustainable token economics, with projects placing more emphasis on real income distribution rather than purely inflationary incentives.

Major Economic Reforms of Aave

Aave recently launched an important token economics reform plan, focusing on buybacks, fee distribution, and optimizing incentives for token holders.

Buyback Plan and Fee Adjustment

Aave has launched a six-month repurchase plan, investing 1 million dollars each week to cover the emissions of AAVE Tokens and enhance the sustainability of the protocol. After six months, the repurchase fund pool could accumulate to 100 million dollars, accounting for about 3% of the circulating supply. The specific funding deployment progress will be determined by the DAO.

Governance and Financial Management Innovation

Aave is establishing a dedicated Financial Committee (AFC) responsible for managing treasury funds and formulating liquidity strategies. At the same time, Aave is completing the transition from LEND Token, reclaiming 320,000 AAVE (approximately $65 million) for future use.

Risk Management System Upgrade

To optimize capital efficiency and reduce risk, Aave has launched the Umbrella system. This system will be implemented across multiple blockchains, including Ethereum, Avalanche, Arbitrum, Gnosis, and Base.

New Reward Mechanism for Stablecoin Holders

Anti-GHO, as an innovative reward mechanism, will replace the old discount model for GHO holders. Holders can burn tokens at a 1:1 ratio to offset GHO debt or convert them into StkGHO, making the incentives directly linked to Aave's revenue.

Jupiter's Buyback Strategy

A certain DEX has started using 50% of the protocol fees for repurchasing and locking JUP tokens since February 17, for a period of three years. This move aims to reduce the circulating supply and enhance long-term stability. So far, the DEX's repurchase plan has repurchased over 10 million JUP tokens, valued at approximately 6 million dollars.

On an annual basis, the buyback scale of this DEX may exceed 35 million USD. If based on a more aggressive estimate, with a revenue of 102 million USD in 2024, then the buyback scale could exceed 50 million USD.

Hyperliquid's Token Economics

Token allocation

The native token HYPE of Hyperliquid has a total supply of 1 billion coins, with no financing and no investor allocation. Of this, 31% is airdropped to early users, 38.888% is reserved for future emissions and community rewards, and 23.8% is allocated to the team (locked for 1 year).

Revenue Model and Buyback Mechanism

The main sources of revenue for Hyperliquid include trading fees and auction fees. 46% of the perpetual contract trading fees are allocated to HLP holders, while 54% is used for HYPE buybacks. In addition, auction fees and a portion of spot trading fees are also used for HYPE buybacks.

deflation mechanism

Hyperliquid adopts a dual deflationary mechanism: buyback and burn. The bought-back HYPE is held by the Assistance Fund, rather than being directly burned. The trading fees for spot transactions priced in HYPE and future Gas fees will be directly burned.

Staking Mechanism

HYPE staking will start on December 30, 2024, using a PoS reward mechanism, with a current annualized yield of about 2.5%. Currently, 30 million HYPE tokens have been staked.

Ethena's Fee Switch and Revenue Sharing

Ethena Labs has become one of the top five DeFi protocols in terms of TVL, with an annual revenue exceeding $300 million. Currently, 824 million ENA (worth $324 million) are staked, accounting for 5.5% of the total supply.

The Ethena plan will enable a fee switch, providing stakers with direct income sharing opportunities. Before enabling, Ethena has set five key indicators to ensure the protocol is in a stable state. These indicators include USDe supply targets, cumulative revenue, exchange integration, reserve fund ratios, and more.

Once all conditions are met, ENA stakers will begin to enjoy revenue sharing.

Summary

Major DeFi protocols are accelerating their transformation towards value accumulation for token holders, making their tokens more valuable beyond speculation through buyback plans, fee switches, and new incentive structures. This trend reflects the industry's overall shift towards sustainable token economics, with projects focusing more on real income distribution rather than inflationary incentives.

With the gradual improvement of the regulatory environment and the maturation of DeFi, those protocols that successfully align with community incentives are expected to flourish.