TLDR:
- HyperSwap will use $6M yearly for HYPE buybacks from $8M revenue, according to DefiLlama data.
- Current HYPE P/E ratio sits around 11.5, suggesting a potential $70M market valuation.
- Protocol revenue is declining, raising questions about long-term sustainability of buybacks.
- HyperSwap plans HIP-3 trading terminal, which could boost revenues and future buybacks.
HyperSwap has unveiled a new strategy aimed at giving HYPE token holders direct exposure to its protocol.
The platform announced it will allocate 75% of its revenue to buybacks and burns. This approach diverges from most decentralized exchanges, including Uniswap, which typically do not pass revenue directly to token holders.
Data from DefiLlama indicates the platform generates between $2–2.5 million per quarter. Annualized, this translates to roughly $8 million, of which $6 million could go to repurchasing HYPE tokens.
Ericonomic, a crypto analyst, highlighted that this buyback strategy could influence HYPE’s market valuation. Using the current P/E ratio of 11.5, HyperSwap’s “fair” market cap could approximate $70 million.
However, analysts caution that revenue trends and competition could affect results. Observers note that buybacks may not fully offset incentive structures needed to attract liquidity.
The upcoming token generation event (TGE) will test the protocol’s approach. Revenue collected before the TGE may not be entirely used, suggesting early figures might differ from projections. HyperSwap is also reportedly working on a HIP-3 trading terminal. If successful, the terminal could boost trading volumes and increase future buybacks.
HYPE Token Price and Market Implications
The HYPE token’s valuation metrics have drawn attention following HyperSwap’s announcement.
Current analysis shows a P/E ratio near 11.5, placing theoretical market capitalization around $70 million. This estimate depends on the continuous flow of revenue into buybacks and token burns. Any deviation in revenue or incentive payouts could impact the token price.
Ericonomic noted that competing decentralized protocols may launch “vampiric” attacks, potentially drawing liquidity away.
HyperSwap’s model requires balancing buybacks with incentive structures. If incentives fail to maintain user engagement, revenue may not sustain projected buybacks. Conversely, the planned HIP-3 terminal could improve transaction activity and generate additional revenue for token repurchases.
Investors will closely monitor quarterly revenue updates. Transparency on revenue allocation will be critical for market confidence. The strategy gives holders a clear connection between protocol performance and token value.
As HyperSwap approaches the TGE, analysts expect more detailed reports on revenue usage and potential market impact.
The community has reacted positively to the initiative. Observers note that while the protocol is a fork, it embraces the Hyperliquid ethos of returning value to users.
HyperSwap’s buyback model stands out among DEXs for creating direct exposure to token holders. The TGE will reveal whether this approach can sustain long-term growth.
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Source: https://blockonomi.com/hyperswap-revenue-strategy-could-shift-crypto-price-dynamics-for-hype-token/