The Zero-Sum Attention Game

In 2021, each crypto asset had, on average, ~$1.8M in stablecoin liquidity. By March 2025, that number had dropped to just $5.5K.

This chart is a visual of falling averages. It is also a snapshot of the zero-sum nature of attention in crypto today. While token creation has exploded to over 40 million assets, stablecoin liquidity—a rough proxy for capital—has remained stagnant. The result is brutal—less capital per project, thinner communities, and rapidly decaying user engagement.

In this environment, fleeting attention is no longer a growth channel. It’s a liability. Without cash flow to back it, the attention moves on. Fast.

Revenue Is the Anchor

Most projects still approach community-building like it’s 2021: create a Discord, dangle airdrop incentives, and hope users shout “GM” long enough to care. But once the airdrop hits, they leave. And why wouldn’t they? There’s no reason to stay. That’s where cash flow becomes useful—not as a financial metric, but as proof of relevance. Products that generate revenue have demand. Demand justifies valuation. And valuation, in turn, gives tokens gravity.

Revenue may not be the goal for every project. But without it, most tokens simply won’t survive long enough to become foundational.

It’s important to distinguish some projects’ positions from the rest of the industry. Take Ethereum, for example—it doesn’t need surplus revenue because it already has a mature, sticky ecosystem. Validator rewards come from ~2.8% annual inflation, but thanks to EIP-1559’s fee burns, that inflation can be offset. As long as burn and yield balance out, ETH holders avoid dilution.

But newer projects don’t have this luxury. When only 20% of your tokens are in circulation and you’re still chasing product-market fit, you’re effectively a startup. You need to earn—and show your ability to keep earning—to survive.

Lifecycle of Protocols: From Explorers to Titans

Like traditional companies, crypto projects exist at different maturity stages. And at each stage, the relationship with revenue—and whether to reinvest or distribute it—changes meaningfully.

1. Explorers: Survive first

These are early-stage projects with centralised governance, fragile ecosystems, and a focus on experimentation over monetisation. Their revenue, where it exists, is often spiky and unsustainable, reflecting market speculation rather than user loyalty. Many rely on incentives, grants, or venture funding to survive.

Projects like Synthetix and Balancer have existed for ~5 years now. Their weekly revenue is in the range of $100k to $1M, with odd spikes during higher activity. These sharp surges and reversals are characteristic of this stage. They’re not signs of failure but of volatility. What matters is whether these teams can translate experiments into reliable usage.

2. Climbers: Traction, but unstable

Climbers are the next rung on the ladder. These are projects earning between $10M–$50M annually and have started to outgrow emissions-based growth. Their governance structures are maturing, and focus is shifting from pure acquisition to long-term retention. Unlike Explorers, whose revenue is often speculative and driven by one-off hype, Climbers have evidence of demand across cycles. They are also evolving structurally—shifting from centralised teams to community-driven governance and diversifying revenue streams.

What makes Climbers distinct is optionality. They’ve earned enough trust to experiment with distribution—some begin revenue-sharing or buybacks—but they also risk losing momentum if they overextend or fail to deepen moats. Unlike Explorers, whose primary job is survival, Climbers must make strategic trade-offs: grow or consolidate, distribute or reinvest, focus or fragment.

This is the most fragile phase, not because of volatility, but because the stakes are real.

These projects face the hardest trade-off: distribute too early, and you risk stalling growth. Wait too long, and token holders lose interest.

3. Titans: Ready to distribute

Projects like Aave, Uniswap, and Hyperliquid have crossed the threshold. They generate consistent revenue, have decentralised governance, and benefit from strong network effects. No longer reliant on inflationary tokenomics, they have entrenched user bases and battle-tested models.

Most of them aren’t trying to do everything. Aave dominates lending. Uniswap owns spot trading. Hyperliquid is building an execution-focused DeFi stack. Their strength comes from defensible positioning and operational discipline.

Most of these are leaders in their category. Their efforts are usually directed towards growing the pie instead of increasing the share.

These are the kind of projects that can afford buybacks and still have years of runway. Though they are not immune to volatility, they have the resilience to weather it.

4. Seasonals: All sizzle, no base

Seasonals are the loudest but the most fragile. Their revenue can temporarily rivals, or even surpass that of Titans, but it’s fuelled by hype, speculation, or fleeting social trends.

Projects like FriendTech and PumpFun create huge bursts of engagement and volume, but rarely retain either.

They’re not inherently bad. Some may pivot and evolve. But most remain momentum plays rather than lasting infrastructure.

What Public Markets Can Teach Us

The public equity world offers useful parallels. Young firms typically reinvest free cash flow to scale. Mature companies distribute it either through dividends or buybacks.

The chart below shows how companies distribute profits. The number of dividend and buyback payers both increase as companies grow older.

Crypto projects can learn from this. Titans should distribute. Explorers should preserve and compound. But not everyone is clear on which category they fall into.

Sector matters too. Utility-like players (e.g., stablecoins) mimic consumer staples: stable, dividend-suited. This is because companies have existed for a long time. Demand patterns are now predictable to a large extent. Companies don’t deviate much from forward guidance or trends. Predictability allows for consistent profit sharing with shareholders. High-growth DeFi projects mirror tech—best served by flexible buybacks. Tech companies have greater seasonality. For the most part, demand is not predictable as in the case of some older sectors. This makes buybacks a preferred option to share value. Had a great quarter/year? Pass on the value by buying shares.

Dividends vs Buybacks

Dividends are sticky. Once you commit to paying them, markets expect consistency. Buybacks, by contrast, are flexible. They allow teams to time value distribution around market cycles or token undervaluation. Buybacks went from ~20% of profit distribution in the 1990s to ~60% in 2024. In dollar terms, they’ve outpaced dividends since 1999.

But buybacks have drawbacks too. If not well-communicated or properly priced, they can transfer value from long-term holders to short-term traders. Governance needs to be watertight. Because the management often has KPIs like increasing earnings per share (EPS). When you use profits to buy shares from the circulation (outstanding shares), you reduce the denominator to artificially inflate the EPS number.

Both buybacks and dividends have a place. But without good governance, buybacks can quietly enrich insiders while the community bleeds.

Good buybacks require three things:

1. Strong treasury reserves
2. Thoughtful valuation logic
3. Transparent reporting

If a project lacks these, it should probably still be in reinvest mode.

How Leading Projects Handle Revenue Today

• @JupiterExchange made it clear at the token launch: no direct revenue share. After a 10x growth in users and a treasury that can last for years, they introduced the Litterbox Trust—a non-custodial buyback mechanism now holding ~$9.7M in JUP.
• @aave, with a $95M+ treasury, allocates $1M/week for buybacks via a structured program called “Buy and Distribute”, following months of community dialogue.
• @HyperliquidX takes it further. 54% of its revenue is used for buybacks, 46% to incentivise LPs. Over $250M in HYPE has been bought back to date—funded entirely without VCs.

What do all these have in common? None of them initiated buybacks until their financial base was secure.

The Missing Layer: IR

Crypto loves to talk about transparency, but most projects only publish metrics when it suits their narrative.

Investor Relations (IR) should become core infrastructure. Projects need to share not just revenue, but spend, runway, treasury strategy, and buyback execution. It’s the only way to build conviction in the long-term.

The goal here isn’t to declare one right way to distribute value. It’s to acknowledge that distribution should match maturity. And maturity is still rare in crypto.

Most projects are still searching for their footing. But the ones that are getting it right—those with revenue, strategy, and trust—have a real chance to become the cathedrals this industry desperately needs.

Strong IR is a moat. It builds trust, reduces panic during downturns, and keeps institutional capital engaged.

What it could look like:

• Quarterly reports on revenue + expenses
• Real-time treasury dashboards
• Public logs of buyback execution
• Clarity on token distribution and unlocks
• On-chain verification for grants, salaries, and ops

If we want tokens to be treated like real assets, they need to start communicating like real businesses.

Disclaimer:

1. This article is reprinted from [Decentralised.Co]. The original title is [When Tokens Burn].All copyrights belong to the original author [@desh_saurabh ]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
2. Liability Disclaimer: The views and opinions expressed in this article are solely those of the author and do not constitute any investment advice.
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