TechFlow News — On March 21, Messari researcher MONK (@defi_monk) pointed out that projects such as RAY, GMX, GNS, and SNX have programmatically repurchased millions of dollars worth of tokens, but the current value of these tokens is significantly below their acquisition cost.
MONK identifies three key fallacies in current crypto projects' approach to programmed token buybacks:
- First, buybacks are unrelated to price performance, which is primarily driven by revenue growth and narrative development;
- Second, when revenues are strong and prices rise, projects end up burning more cash reserves to buy back tokens at unfavorable, inflated prices;
- Third, when both price and revenue decline, projects lack sufficient capital to invest in innovation or restructuring, and may face substantial unrealized losses.
In summary, MONK argues that most current token buyback strategies in crypto represent "poor capital allocation." Instead, projects should focus on aggressive growth or distribute real value to holders via stablecoins or major cryptocurrencies (such as veAERO or BananaGun).
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