Bitwise chief investment officer: agreement to link revenue to tokens may double crypto valuation

Crypto valuation framework may be updated: Agreement revenue shifts to token repurchase and destruction, Bitwise's chief investment officer says the market has not yet fully priced

As more and more networks convert agreement revenue into token repurchase and destruction mechanisms, the valuation framework for crypto assets may be updated. Matt Hogan, chief investment officer at Bitwise, believes the market has not yet fully priced the shift. In a memo on Wednesday, Hogan described a growing "revenue-driven" model among crypto assets other than Bitcoin-where actual usage and on-chain activity can be translated into the value of native tokens, which could support higher valuation expectations than current indicators imply.

Hagen further pointed out that if decentralized finance (DeFi) and tier-1 networks continue to adopt fee-to-token mechanisms in the next 12 to 24 months, investors may start to see token economic models present a more familiar valuation logic. However, he also pointed out that token holders do not have legal rights to cash flow like traditional shareholders, and that many token economic structures may be modified by the community.

Core Views

Matt Hogan, chief investment officer at Bitwise, said that the market is underestimating those crypto assets that are increasingly using agreement revenue for repurchase and destruction. He expects more DeFi and Tier 1 networks to add revenue capture capabilities within 12 to 24 months. According to agreement data, Hyperliquid reported second-quarter revenue of $169 million, of which $141 million was used for HYPE repos. Uniswap's "Unification" fee plan aims to fund UNI destruction through a fee collection mechanism that has been approved to launch at the end of 2025. Aave DAO's token repurchase program has purchased more than 205,000 AAVEs in the first 10 months after its launch, and an automated solution is under development.

How agreement revenue changes the token value narrative

Hogan's core thesis is that the value of native tokens is increasingly tied to online activity, rather than being driven purely by speculation. He described the shift as a transition to a new model-in which fees and revenue can flow back to the management of token supply, whether it is reduced by purchasing tokens or destroying them. For investors, the practical significance is that certain assets may start to look more like revenue-generating businesses, at least in terms of the economic connection between use and token scarcity. Hou Gen emphasized that this is important because traditional valuation methods are highly dependent on how cash flows are distributed to owners. In contrast, tokens typically do not give the holder a direct legal claim to income, and community-controlled token economic models may evolve over time.

Still, Hogan's memo suggests that current market pricing may not yet reflect the trend of fees being increasingly directed towards token purchase and destruction structures.

DeFi Example: Fee Flow to Repurchase and Destruction

Hogan pointed to several agreements that have implemented revenue-to-token mechanisms, each providing a way to transform activities into token supply changes.

Hyperliquid: Repurchase and large revenue distribution

Hyperliquid-described as a decentralized exchange-reported that it generated more than $800 million in revenue last year and spent about 99% of that on the purchase and destruction of HYPE. According to reports cited in the Hogan memorandum, the agreement reported second-quarter revenue of $169 million on August 6 and said it would use $141 million for HYPE repurchases.

Uniswap: UNI destruction linked to fee activation

Uniswap's path to changes in revenue-based token supply revolves around its "Unification" reform. Earlier reports pointed out that the activation of agreement fees has been approved and UNI destruction is considered. The mechanism is designed so that the collected fees can be claimed through the destruction of UNI. The update cited in the memorandum shows that the protocol is expected to take effect on December 22, 2025 by activating the destruction mechanism.

Aave: Repurchase backed by agreement revenue

Aave provides a clearer example of a repurchase program supported by agreement performance. According to cited governance documents and founder statements, Aave DAO's repurchase program purchased more than 205,000 AAVE units in the first 10 months after launch. On June 25, Aave founder Stani Kurechev said that the team was designing an automated, non-discretionary repurchase mechanism. Kurechev said in a related speech that "100% of Aave Agreement and GHO revenue flows to $AAVE tokens," referring to the "AAVE will win" proposal, which established this policy framework.

What regulatory changes may release-and what uncertainties remain

Hogan linked this broad shift to a revenue-sharing token economy model to a potentially more friendly regulatory environment in the United States. He believes that after years of shunning certain designs due to securities law concerns, project parties may be increasingly willing to implement structures similar to traditional income distribution. As stated in the memorandum, Hogan believes that regulatory guidance may allow the crypto industry to continue to expand even if a specific federal legal framework is not passed-pointing to earlier discussions about whether the industry can "continue to expand" outside the broader legislative timeline. For readers, the key question is not whether income-to-token mechanisms will work-which has been proven in multiple cases-but whether regulation will encourage more networks to replicate these models on a large scale, and whether investors can reliably predict token economic models when token holders lack enforceable cash flow rights in the stock market.

What this means for valuations-and how to focus on the next phase

Hogan believes that a stronger link between agreement revenue and token value can help it be easier to evaluate crypto assets using more traditional tools. This does not mean that tokens have become exactly the same as stocks; rather, the core point of the memorandum is that the market may have underestimated the extent to which fee-driven buybacks and demolitions change expected token supply dynamics over the long term. At the same time, investors should focus on the details of deciding whether a repurchase or destruction is sustainable: how revenue is calculated, how fees continue to flow to token holders (or token supply management), and whether automated or governance processes remain reliable over the market cycle. Hogan's emphasis on the community-set token economy model reminds us that these mechanisms can change, sometimes quickly, depending on governance outcomes.

In the coming months, investors are likely to need to focus on whether more DeFi protocols and major tier 1 ecosystems follow the same approach-especially how they use protocol revenue for token provisioning actions-and whether regulators provide clearer guidance to reduce uncertainty in considering revenue-capture design projects.