Bitwise Chief Investment Officer: Token revenue is expected to double cryptocurrency valuation

Bitwise Chief Investment Officer: Crypto asset valuations may double due to revenue capture mechanism

Bitwise Chief Investment Officer Matt Hougan pointed out on August 12 that as more protocols link revenue generated by online activities to their native tokens, the valuation of crypto assets other than Bitcoin may rise sharply.

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Matt Hougan, chief information officer of Bitwise, said that stronger revenue capture capabilities may push the valuation of crypto assets to double or even higher.

Hyperliquid uses approximately 99% of its fee income to purchase HYPE tokens through its aid fund mechanism.

Since December 2025, the Uniswap governance mechanism has burned approximately 7.5 million UNI tokens through agreement fees.

Aave used US$42 million to acquire more than 205,000 AAVE tokens in the first ten months of launching the repurchase program.

Members of the U.S. Securities and Exchange Commission (SEC) plan to review customized issuance rules for crypto assets at a public meeting on Friday.

In a memo, Hougan cited projects such as Hyperliquid, Uniswap, Aave, Pump.fun and Lighter as examples of how they used fees or other agreement revenue to fund token purchases or destruction. He expects more DeFi applications and Layer 1 networks to adopt similar structures in the next 12 to 24 months.

His boldest predictions came with clear conditions. Hougan wrote that if his view-that the correlation between agreement revenue and token value continues to strengthen-is proven correct,"we may see valuations doubling or even higher." Bitwise also stated that the memorandum only represents an assessment at a specific point in time and does not constitute a guarantee of future results, nor is it used as investment advice.

Crypto-asset valuations face revenue test

Hougan's argument is based on changes in the way some tokens capture economic value. Historically, many governance tokens have given voting rights to holders, but have not directly linked agreement fees to token demand. Repurchase and destruction mechanisms attempt to establish this link by using revenue to purchase tokens from the market and then removing them from the supply or retaining them in an agreement-controlled mechanism.

"For years, revenue has been the best reason to oppose crypto assets. It's about to become the best reason to support crypto assets."-- Matt Hougan

Hyperliquid is one of the clearest cases yet. Its official documents show that transaction fees flowed to the aid fund, which converted them into HYPE tokens, and the acquired HYPE was destroyed and removed from the circulating supply and total supply. Hougan estimates that about 99% of fee revenue has been used for the mechanism.

This model has become an important part of HYPE's investment narrative. It was previously reported that Hyperliquid spent more than $1.16 billion in transaction fees on the purchase of HYPE, creating cyclical token demand related to exchange activity. This demand still depends on transaction volume and fee generation, meaning that weaker activity will reduce the amount of money available for future purchases.

Hougan compares this structure to share buybacks, but this comparison has limitations. Cryptocurrency tokens do not automatically have the legal rights attached to company equity. Token holders often lack shareholders 'contractual claims on profits, assets, or distributions, and governance mechanisms can change the token economy model. Hougan acknowledged these differences in his analysis.

Uniswap and Aave demonstrate two different revenue models

Since the governance mechanism approved the UNIfication proposal in December 2025, Uniswap has taken further steps towards automated destruction structures. The measure destroyed 100 million UNIs from the treasury and activated agreement fees for v2 and v3 pools. As of July, the Uniswap governance mechanism reported that agreement fees had funded the destruction of approximately 7.5 million additional UNIs, worth approximately $25.6 million based on the numbers used in the proposal.

The system continues to expand. An on-chain vote on the fee to activate the v4 protocol on Ethereum, Arbitrum, Base, BNB Chain, Polygon, Optimism and Robinhood Chain was implemented on July 27, with 46.6 million UNIs voting in favor. In related reports, Uniswap has expanded its revenue-linked UNI destruction mechanism, while the governance mechanism has extended protocol fees to more versions and networks.

Aave adopts a different structure. DAO funding records show that its repurchase program acquired more than 205,000 AAVE tokens in the first 10 months after it was launched in April 2025. Approximately $42 million has been spent on these purchases, accounting for more than 1.28% of AAVE's total supply of 16 million units.

Aave's broader revenue framework is also evolving. Its "Aave Will Win" proposal directs 100% of revenue generated by Aave branded products to the DAO treasury (after specific partner revenue sharing and user incentives). The framework also states that the DAO charges an agreement fee. But this does not mean that every dollar that reaches the treasury will be automatically and immediately used to purchase AAVE.

Kulechov said in June that "100% of revenue from the Aave Agreement and GHO goes to $AAVE tokens," while saying the team is designing an automated, non-discretionary Aavenomics 3.0 repurchase system. This distinction is important because the new automation mechanism is described as work in progress rather than a completed deployment. Previous reports have shown that the Aave governance mechanism is considering larger regular AAVE repos.

Pump.fun and Solana push revenue capture beyond DeFi

Pump.fun makes its expense model extremely clear. Its official token page lists 50% of the agreement revenue for repurchase. The platform previously shifted from a model where all revenue commitments were used for purchases to a structure where half of net revenue was used for automated PUMP repurchase and destruction.

The mechanism is generating measurable activity. There were reports this week that Pump.fun incurred $10.03 million in weekly agreement fees between August 3 and 9, while burning $5.02 million in PUMP. The platform said it purchased and destroyed 2.15 billion PUMPs during this period.

The same debate is spreading to basic economic models. Hougan cited Solana's SGP0003 process, which combines proposals aimed at increasing the cost of destruction and reducing token issuance more quickly. One of the components, SIMD 0553, will replace Solana's fixed signature fee with a base fee plus a charge based on resource consumption (which is destroyed). Proposal author Temporal's model estimates that at the same level of network activity, full implementation could increase daily destruction from approximately 648 SOL to 7500 to 9000 SOL.

The proposal has gone beyond the initial conceptual stage. The validator vote reached the required threshold on August 5, and the formal governance process is now underway. The proposal still requires validator approval, so the expected increase in SOL destruction should not be considered an implemented change.

U.S. regulatory policies or determine the scope of promotion of revenue models

Hougan attributed part of the shift to a token revenue mechanism to a more relaxed regulatory environment in the United States. His argument cited the Ripple lawsuit and the change of leadership at the SEC, but legal history needs to be more precise than simply saying that XRP was not ruled a security. The district court found that Ripple's institutional sales violated securities laws and that certain other sales did not constitute investment contracts. The SEC and Ripple withdrew the appeal in August 2025, leaving the final verdict unchanged.

The regulatory framework has changed further since then. In March 2026, the SEC passed an interpretation that created a classification for crypto assets and addressed the issue of when non-securities crypto assets might still involve investment contracts. Chairman Paul Atkins described the framework as an effort to provide clearer boundaries under existing federal securities laws.

This does not amount to full legal recognition of token repurchase, destruction or revenue distribution. Security analysis may still depend on the way the token was issued, the rights or commitments attached, and the relationship between the buyer and the project team. As a result, Hougan's claim that regulatory changes will accelerate revenue capture is an investment argument rather than an established legal outcome.

The next step in America's development will come soon. The SEC plans to hold a public meeting at 10 a.m. EST on August 14 to consider whether to propose customized issuance rules for certain investment contracts involving crypto assets. The agenda does not state that these rules will specifically authorize token revenue sharing. Any proposal will need to go through further rulemaking steps before it becomes the final rule.

This regulatory process will have an impact on Hougan's broader argument. It has been previously reported that Hougan expects U.S. crypto asset growth to continue despite delays in the CLARITY Act, in part because he believes agency rulemaking can provide another path to clearer operating conditions. Whether these rules will make income capture easier and whether investors will give higher valuations as a result remains to be confirmed.