TLDR
- Bitwise CIO Matt Hougan says protocol revenue is becoming a key valuation factor for crypto assets beyond Bitcoin.
- Hyperliquid has used nearly 99% of its fee revenue to buy and burn HYPE, totaling about $1.3 billion since launch.
- Uniswap, Aave, Pump.fun, and Lighter are also using token buybacks and burns to connect protocol activity with token supply.
- Hougan believes stronger revenue capture could support crypto market valuations doubling or more if investors recognize the shift.
- Hyperliquid’s Q2 revenue fell year over year, showing that protocol earnings can still fluctuate with trading activity.
- Layer 1 networks such as Solana and Aptos are changing fee and inflation models to increase token burns.
Bitwise CIO Matt Hougan says the crypto market may be mispricing assets outside Bitcoin (BTC) as more protocols link revenue to token demand. He argues that buybacks, burns, and fee changes give investors ways to compare token value with business activity.
Crypto Market Turns Toward Revenue-Based Token Models
Hougan said Hyperliquid offers a clear example. The protocol generated more than $800 million in revenue last year and used about 99% of fee revenue to buy and burn HYPE. Since HYPE launched in November 2024, Hyperliquid has bought and burned about $1.3 billion worth of tokens.
Other projects have adopted similar models. Uniswap generates about $100 million in annual revenue. Aave targets about $30 million in AAVE burns. Pump.fun has reported $328 million in annual revenue, while Lighter has repurchased about 6% of LIT’s circulating supply.
Hyperliquid Shows Growth and Revenue Risk
Hougan said Hyperliquid trades at an earnings multiple ranging from 17 to 60 times, depending on whether investors use circulating or fully diluted supply. He said stronger links between protocol revenue and token demand could support higher valuations if investors continue using similar measures.
Recent data also shows why revenue-based crypto market valuations carry risks. Hyperliquid generated $169.37 million in second-quarter revenue, down 6.6% from the previous quarter and 11.8% from a year earlier. Quarterly buybacks still reached $140.66 million, while cumulative holder revenue moved above $1 billion.
Layer 1 Networks Adjust Fees and Supply
The revenue model is spreading beyond DeFi. Solana’s SGP-0003 proposal would reduce inflation and increase fee burns by as much as 14 times. Aptos raised gas fees tenfold earlier this year while transaction activity nearly tripled.
Aptos also increased annual token burns from about 90,000 tokens to roughly 1.9 million. These changes show how Layer 1 networks are testing supply rules that connect network use with token economics.
Hougan linked the change to a friendlier regulatory setting in the United States. He cited the 2023 Ripple ruling, the end of the case in August 2025, and Paul Atkins replacing Gary Gensler as SEC chair.
He said earlier regulation pushed many projects toward governance tokens with limited revenue links. Bitwise has also filed for a Hyperliquid ETF. Hougan noted that crypto tokens are not equities and do not give holders legal claims on protocol cash flow.
