The markets demand for buybacks is retarded. But they aren’t all bad. History Buybacks historically became popular since it alligns team and tokenholders. It was very uncertain what rights to the protocol tokenholders have vs the team. Tokens were discounted due to this “rug risk”. Committing to regular buybacks were a way for teams to signal their allignment. Note: Equity doesn’t have this problem since there are legal rights. Today The problem is, crypto is recursive. Since most teams do buybacks, the market demands new projects also commit to it, without really understanding if it’s the best idea. I expect its also because crypto investors are relatively unsophisticated, and have trouble pricing non-buyback projects 😂 This is why revenue has historically been bearish, since if the market struggles to price your project; crypto speculative multiples take over. So how should we think about buybacks? - Commiting to buybacks is an (expensive) marketing tool. This is obvious when you consider token emissions as marketing, buybacks invest in future marketing! - Every project has a value under which buybacks make sense. Its unfair to say they never do. E.g. if the project has 60m in cash, but is worth 50m by the market, it makes sense to do a buyback since its an arbitrage 20% return for tokenholders! -If you don’t do buybacks, you need to invest in showing the market how to accurately price your reinvestments! Don’t expect your holders to have blind faith! - Most importantly, systematic buyback programs are NEVER the best investment. The team has the best info on how to price reinvestments, they should use this to actively buyback when the project is undervalued, and not buy the top! Tl;dr - Buybacks are a marketing tool. - Teams shouldn’t be forced to do them just because the rest of the market does. - Systematic buyback programs don’t work, instead implement a discretionary buyback. - If you don’t do buybacks, make sure you are doing amazing marketing and comms! - Don’t lose the faith of the community.