The Buyback Illusion

In the past few months, the crypto community has embraced a new belief: that the key to a successful token launch is a buyback program — when the team behind a token spends part of its profits to buy its own token on the open market.

And yes, there’s some logic to it. At least it gives holders the comfort of knowing that as long as the project is profitable, there will always be at least one buyer out there.

That matters more than it seems. You’d be surprised how often people come to us at rabbit.io with bags of completely illiquid tokens. Sometimes we manage to find swap options for them. But in some cases, even we can’t help. If there’s zero demand on the market, there’s simply nothing to swap into.

A buyback promise can help… but it doesn’t guarantee price stability. Most tokens funded by issuer profits still tend to fall with the rest of the market when the tide goes out.

The screenshot above shows the latest CryptoRank data for several of these buyback-based tokens.