The Secret Behind Altcoins Leading the Rally: Privacy Coins Double, Meme Coins Enter a Rat Race, and Who’s Quietly Burning Cash on Buybacks?

Author: Cooper Duschang

Compiled by: TechFlow

TechFlow Overview: The biggest difference between this altcoin rally and past ones is that capital has stopped blindly chasing Meme coins, instead flowing toward protocols that actually generate revenue. Privacy coins are making a comeback due to practical utility, while lending and DEX leaders are using revenue to buy back tokens. The message to investors is straightforward: stop looking only at narratives; look at protocol ledgers.

Key Takeaways

• As investors continue to focus on the utility of tokens and protocols, Meme coin launch platforms and privacy coins have attracted increased interest. Within MSCI's classification, the year-to-date median return for Meme coins stands at -27%.
• Investors are shifting toward revenue-generating protocols, such as Aave, which is expected to generate $47 million in revenue from its Ethereum lending protocol. Service monetization is becoming an increasingly important metric for measuring protocol growth.
• Protocols like Hyperliquid and Uniswap are leveraging revenue to repurchase and reduce the circulating token supply. Since announcing its buyback program, Uniswap has already burned over $12 million worth of UNI tokens.

Introduction

BTC accounts for approximately 56% of the total crypto market cap. Historically, the crypto market has been dominated by monitoring Bitcoin's returns and its response to macroeconomic conditions. While Bitcoin may dominate a significant portion of the crypto market, it does not represent the entire industry.

In previous bull markets, capital typically flowed first into blue-chip and large-cap crypto assets (BTC, ETH, SOL) before rotating into alts. This dynamic has changed. Today, alts sometimes receive attention comparable to or even exceeding that of large-cap crypto assets. The various crypto sectors and sub-sectors that make up alts provide investors with ample opportunities to capture excess returns.

During the recent market rebound, investor interest in alts has become more concentrated within a few select sectors and protocols as sentiment improved. In this Network Status Report, we will explore the trends driving the performance of privacy coins and Meme coins, the shift from Meme coins to revenue-generating protocols, and highlight protocols leveraging revenue for token buybacks to return value to holders.

Privacy Coins

The pseudo-anonymous nature of blockchains allows users to identify spending patterns, counterparties, and other information, limiting the number of sensitive activities executed on-chain. One leading privacy solution is the Zcash network. Forked from the Bitcoin codebase in 2016, Zcash introduced optional private transactions and addresses. Year-to-date, Zcash has delivered a 218% return.

Source: Talos CM Market Data Pro

ZEC futures exploded in October 2025, with open interest surpassing $300 million heading into 2026. Following a reversal triggered when funding rates turned negative, open interest continued to climb and has now exceeded $2 billion.

Source: Talos CM Network Data Pro

Zcash supports two key features designed to enhance privacy: shield pools and shielded transactions. Shield pools offer customized cryptographic security and privacy attributes. Shielded transactions utilize zero-knowledge proofs to keep transaction details such as participants and amounts hidden.

In 2026, the supply of shielded ZEC hit a new high, with slightly over 30% of the total ZEC supply held in shielded or private addresses. Shielded transactions account for 52% of Zcash's total transaction volume, demonstrating user adoption of privacy-preserving technologies. Amid a resurgence of interest in the crypto market, usage surged in August 2026.

Meme Coins

Meme coins have historically helped networks bootstrap liquidity and attract capital. Ecosystem-specific launch platforms are gaining traction. Users are primarily migrating to Pump.fun on Solana and Pons on the Robinhood chain; the PUMP token is up 134% year-to-date.

Source: Talos CM Prices

Not all Meme coins are created equal: very few tokens within the category have posted positive returns year-to-date. In MSCI's Datonomy sub-sector, Meme coins hold a median loss of 27%.

Successful Meme coins are adopting new distribution mechanisms. Some have created pools that pair their respective tokens with tokenized stocks. This practice has gained popularity on the Robinhood chain, where these pools attempt to drive up both the Meme coin and tokenized stock prices by manipulating the circulating supply of the tokenized equities.

Source: Talos CM Network Data Pro

Example: Developers create a “MEME/AMC Tokenized Stock (AMC)” Uniswap pool. Users purchase AMC and swap it in the pool for MEME. The more AMC held in the pool, the higher the MEME token price becomes due to reduced availability for swaps. As investors compete to acquire MEME, the limited supply of AMC drives up the price of the AMC tokenized stock. To meet demand for AMC, authorized market makers are forced to buy AMC shares on traditional exchanges, tokenize them, and sell them to buyers. This buying pressure aims to inflate the AMC stock price by decoupling the tokenized variant's price from the underlying equity.

Revenue-Generating Protocols

On the other end of the spectrum, investors are also allocating to protocols that have successfully monetized their services, such as Meme coin launch platforms.

Uniswap’s UNIfication proposal enables the Uniswap protocol to capture a portion of trading fees from v2 and v3 pools. With the fee switch mechanism activated, Uniswap can fund additional initiatives, incentives, and measures to drive protocol growth. As of August 2026, v3 pools accounted for approximately 47% of Uniswap’s volume on Ethereum.

Source: Talos CM Market Data Pro

Lending protocols have also carved out sustainable growth potential. Each Aave lending market features a reserve factor, which diverts a portion of the interest earned by borrowers directly into the Aave treasury. Lending stablecoins is highly popular due to price stability and deep liquidity. On Ethereum, five stablecoins on Aave account for roughly 68% of total fee revenue. On an annualized basis, Aave is projected to generate approximately $47 million in revenue from its Ethereum lending protocol.

Source: Talos CM Network Data Pro

Token Buybacks and Burns

A popular use of protocol revenue is to buy back tokens from the open market and burn them or remove them from circulation. An increasing number of protocols are announcing token buybacks to return value to holders.

Source: Talos CM Market Data Pro

Hyperliquid consistently uses revenue to buy back and burn HYPE tokens. Services and products generating revenue for Hyperliquid include:

Trading Volume: Trading volume on the HyperCore market, HIP-3 HyperEVM market, and HIP-4 outcomes market generates trading fees, a portion of which is managed by Hyperliquid.

HIP-1 and HIP-3 Auctions: HIP-1 and HIP-3 builders bid HYPE to win auctions. Upon winning, HIP-1 or HIP-3 builders can deploy spot or perpetual markets on HyperEVM, respectively. The HYPE tokens bid by the winners are burned.

USDC as AQAv2: USDC serves as an Aligned Quote Asset v2 (AQAv2). For every $1 of yield generated from USDC-backed Treasuries and short-term assets on Hyperliquid, Circle and Coinbase must share approximately 90% of the reserve yield with Hyperliquid.

HyperEVM Fees: Fees for interacting with the HyperEVM network are collected by Hyperliquid validators who secure the network.

Other revenue-generating protocols, including Uniswap and Aave, are also repurchasing and burning tokens. On Ethereum, Uniswap has burned over $12 million worth of UNI. Recent guidance issued by the SEC supports well-functioning protocols buying back tokens without classifying the tokens as securities.

Source: Talos CM Network Data Pro

Outlook

The recent altcoin rally has been more concentrated and deemed higher quality than in the past. While Meme coins still play a part in the gains, we are seeing capital rotate toward protocol tokens with dominant thematic exposure. These protocols generate revenue from their services and channel it back into improving the protocol through reinvestment or token buybacks.