By Hyunsu Jung, CEO at Hyperion DeFi.
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Despite nearly two decades of development, experimentation, and finally adoption, one fundamental question remains unsolved in crypto: how does the value (if any) generated by a blockchain-based platform or product accrue back to its native token?
Start with Bitcoin, the de facto face of crypto, which at its peak had several narrative tailwinds — digital gold, inflation hedge and institutional portfolio diversifier. Today, it trades approximately 45% below its all-time high while its physical counterpart proved to be the safe haven asset of choice for investors in times of monetary debasement and persistent volatility. This leaves Bitcoin in strategic limbo and investors uncertain of its value proposition.
Ethereum paved the way for public blockchains built for smart contract applications, enabling DeFi (“Decentralized Finance”), stablecoins and permissionless financial services on-chain. Nearly 100 other Layer-1 blockchains followed, raising several billion dollars in aggregate funding to build “better tech”: higher throughput, lower latency blockchains with more flexible consensus mechanisms.
But none of those improvements addressed the core problem of sustainable revenue models for supplying blockspace and direct value accrual to token holders.
Because of this, most blockchains today are inflationary, issuing their native tokens to subsidize demand, and untethered from the economic activity that they facilitate. Put simply, token supply expands faster than token demand created through real usage.
More recently, a new class of high-performance blockchains has emerged, designed around trading and other fee-generating applications. Some of these platforms now generate more daily revenue on average than legacy networks, at times accounting for a meaningful share of total on-chain revenue. In certain cases, a significant portion of that revenue is autonomously routed toward buyback and burn mechanisms tied to the network’s native token.
As a result, portions of circulating token supply have been permanently removed from the market over time. In a few instances, these tokens have become structurally deflationary, meaning that the amount removed from circulation on a given day exceeds the amount issued to support network operations.
These models are built around offering products that users are willing to pay to use — for example, decentralized exchanges operating seamlessly on-chain with fast execution and low cost. Notably, some of these platforms have been developed without heavy reliance on external funding, reducing potential overhangs on circulating supply.
This shift has begun to reframe how investors evaluate token models. Increasingly, there is recognition that many tokens do not represent equity or enforceable claims on future protocol growth and adoption.
In practice, these tokens were often artificial digital value created by the protocols to sell on the open market and fund operations. With massive token supply and diminishing organic demand, most tokens will trend in one direction: down.
This feedback loop will likely accelerate as more tokens need to be sold to finance continued operating costs in a falling price environment.
Because of this, investors are beginning to pay closer attention to token models where supply dynamics are directly linked to real platform usage. In models where fees are consistently used to remove tokens from circulation, sustained user activity can directly impact supply over time.
In parallel, many of these networks are reducing emissions and token unlocks over time, further tightening supply dynamics.
On the demand side, these tokens often have embedded utility. They may need to be staked to access benefits such as reduced fees, participation in new market deployments or eligibility for incentive mechanisms tied to ecosystem growth.
Development teams are also continuing to introduce new demand drivers, particularly through the expansion of financial products on-chain. For example, newer protocol upgrades are enabling use cases like prediction markets, broadening the addressable user base beyond traditional crypto-native participants.
As the product base expands, so does user participation, creating a flywheel effect that can accelerate fee generation and the associated removal of tokens from circulating supply.
2026 looks to be the year of the most significant institutional adoption of crypto and blockchain infrastructure. As this occurs, we may also see a shift in how investors assess the digital asset landscape and opportunities in liquid token investing.
Due to the structural flaws in many blockchain protocols and their tokens, capital will likely continue migrating toward networks that demonstrate sustainable economic models and clearer pathways for returning value to their ecosystems.
