Buybacks can make sense when the protocol generates real, recurring revenue and has surplus capital beyond operational runway and liquidity commitments.

There are two common approaches.

The first is transparent and rules-based — committing a defined percentage of revenue to open-market buybacks. When clearly structured and sustainably funded, this creates a visible demand driver and aligns token holders with protocol performance.

The second is discretionary — conducting opportunistic purchases to support price action. While sometimes used tactically, this approach is less advisable. It introduces opacity, can distort incentives, and may create regulatory or signaling risk if perceived as price management.

Buybacks should be structured as part of a coherent capital allocation policy — not as a reaction to volatility. Sustainable revenue must precede sustainable buybacks.