Uniswap, Lido, Aave?! The worry of DeFi centralization through acquisition of tokens.

When the administrators of Uniswap presented the “UNIfication” proposal on November 10, this document resembled more of a corporate restructuring plan than a protocol update.

This plan will activate the protocol fees that are currently “dormant”, transferring them through a new on-chain treasury mechanism, and using the profits generated to buy back and burn UNI. This model is similar to share buyback programs in traditional finance.

A day later, Lido introduced a similar mechanism. Their DAO proposed an automatic buyback system, where excess staking revenue is used to buy back the governance token LDO when the price of ETH exceeds 3,000 USD and the annual revenue exceeds 40 million USD.

This approach is counter-cyclical, stronger in bullish markets, and cautious when market conditions tighten.

These initiatives mark an important shift in DeFi.

After years dominated by meme tokens and liquidity campaigns based on rewards, major DeFi protocols are repositioning around the important fundamentals of the market: revenue, fees, and capital efficiency.

However, this change forces the industry to confront difficult questions about control, sustainability, and whether decentralization is giving way to business logic.

New financial logic of DeFi

Most of the DeFi growth in 2024 is driven by cultural momentum, reward programs, and liquidity mining. The reactivation of fees and the implementation of a token buyback mechanism indicate an effort to link token value more directly to business performance.

In the case of Uniswap, the plan to buy back a maximum of 100 million UNI redefines the token from a purely governance asset to something more akin to a claim on the economic structure of the protocol, although it still lacks legal rights or cash flows similar to stocks.

The scale of these programs is significant. According to estimates from BREAD researchers at MegaETH Labs, Uniswap could generate around 38 million USD in buyback potential each month based on current fee assumptions. This figure surpasses the buyback rate of Pump.fun and only falls short of the estimated 95 million USD from Hyperliquid.

Meanwhile, Lido's mechanism can support around 10 million USD in buybacks annually, with LDO being purchased in combination with wstETH and put into liquidity pools to increase trading depth.

*Hyperliquid compared to Uniswap compared to the token buyback of Pump.fun (Source: Bread)*Similar initiatives are also accelerating elsewhere: Jupiter allocates 50% of operating revenue for JUP buybacks, dYdX allocates 25% of network fees for buybacks and encourages validators, Aave plans to commit up to 50 million USD each year for buybacks from the treasury.

Data from Keyrock shows that revenue-related payments to tokenholders have increased more than 5 times since 2024. In July alone, protocols have spent or distributed approximately 800 million USD for buybacks and rewards.

As a result, about 64% of the revenue from major protocols is currently flowing back to tokenholders, reversing completely from previous cycles that prioritized reinvestment over distribution. This trend reflects a growing belief that scarcity and recurring revenue are becoming central to DeFi value.

Revenue of DeFi protocol holders (Source: Keyrock)## Token economic organization

The wave of token buybacks reflects the increasingly strong convergence between DeFi and traditional finance.

DeFi protocols are adopting familiar metrics such as price-to-revenue ratio, yield threshold, and net distribution rate to convey value to investors in a manner similar to growth companies.

This convergence creates a common analytical language for funds, but at the same time raises expectations for the discipline and transparency that DeFi was never designed to meet.

Notably, Keyrock's analysis shows that many programs rely more on existing treasury than on sustainable and recurring cash flow. This approach may support prices in the short term but raises questions about long-term sustainability, especially when fee revenues are cyclical and often accompany rising token prices.

*The development of DeFi token buybacks (Source: Keyrock)*Experts like Marc Ajoon (Blockworks) also warn that discretionary buybacks often have limited impact on the market and can cause the protocol to incur unrealized losses when the token price drops.

According to him, the automated data system will be more effective: deploying capital when undervalued, reinvesting when the growth index declines, and ensuring buybacks reflect actual operational efficiency rather than speculative pressure.

Jeff Dorman, CIO of Arca, emphasized: acquiring reduces the number of circulating tokens but tokens exist within the network, where supply cannot be compensated by restructuring or traditional M&A. Burning tokens can drive complete distribution, but holding tokens still provides the option for future issuance if necessary.

New Risks

Although the financial logic of token buybacks is clear, the governance impact is not straightforward.

The UNIfication proposal from Uniswap will transfer operational control from the community to Uniswap Labs – a private entity. This centralization has analysts warning of the risk of recreating the hierarchical structures that decentralized governance aims to avoid.

DeFi researcher Ignas stated: “The OG vision of decentralization is facing challenges.” He pointed out that centralized power, even when economically rational, reduces transparency and user participation.

However, supporters argue that this concentration may be more functional than ideological. Eddy Lazzarin, CTO at A16z, describes UNIfication as a “closed” model, where revenue from decentralized infrastructure flows directly to tokenholders. The DAO still retains the right to issue new tokens for future development, balancing flexibility and financial discipline.

When treasury management protocols handle hundreds of millions of USD, their strategic decisions impact the entire liquidity ecosystem. Therefore, as the DeFi economy matures, the debate on governance is shifting from philosophy to its impact on the balance sheet.

The Maturity Challenge of DeFi

The wave of token buybacks indicates that DeFi is moving towards a more structured industry, based on metrics and data. Transparency of cash flow, accountability for efficiency, and engagement with investors are replacing the free experimentation that used to be characteristic of this field.

However, maturity comes with new risks: governance may lean towards centralized control, regulators may view buybacks as dividends, and development teams may shift their focus from innovation to financial engineering.

The sustainability of this transition depends on the implementation. On-chain automation models can ensure transparency and maintain decentralization. Discretionary buyback programs, no matter how swift, can easily undermine credibility and legal transparency.

Hybrid systems, linked to measurable network indices, can be an interim solution, although not many cases have proven their durability.

It is clear that DeFi is no longer just mimicking traditional finance. The industry is adopting corporate disciplines such as treasury management, capital allocation, and financial prudence while still maintaining an open-source foundation.

Buying back tokens is the clearest manifestation of this convergence, as it combines market behavior with economic logic, transforming protocols into self-funding organizations, relying on revenue, accountable to the community, and measured by execution efficiency, rather than ideals or ideologies.

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