The average Stablecoin liquidity per token fell from $1.8 million in 2021 to a 99.7% drop, a mere $5,500 in March 2025, forcing the protocol to show a healthy reason for investors to hold.
According to Recent Reports Due to the diversification of research firms, this decline shows how the rise in token issuance, currently exceeding 40 million assets, diluting available capital without a corresponding increase in demand or user retention.
The report frames this trend as evidence of zero-sum dynamics in crypto capital allocation, with new tokens exceeding the expansion of capital pools, resulting in lower liquidity, weaker communities, and lower engagement.
Without a durable revenue stream, users’ interests follow short-term incentives such as airdrops. Without a sustainable economic structure, attention has become a responsibility, not an asset.
Fluidity compression
This report used Stablecoin liquidity as a proxy for capital availability. The stagnation of new capital inflows amid a surge in token counts has highlighted the lack of capital in many crypto projects.
Due to the low resources per token, traditional 2021 playbooks have launched communities through Discord servers and Airdrop campaigns to avoid creating lasting engagement.
Instead, the report argues that projects now need to demonstrate the fit and enduring demand of the product market through revenue generation.
Revenue serves as a financial indicator and as a mechanism for its relevance and economic utility. Protocols that generate and retain cash flows are more suitable to justify token valuations, establish governance legitimacy, and maintain user participation.
This report distinguished between mature platforms like Ethereum (ETH), which rely on ecosystem depth and native incentives, and new protocols that require you to gain your place through consistent performance and transparent manipulation.
Different capital needs and strategies
This report outlined the four stages of maturation in the crypto project: Explorer, Climber, Titan and Seasons. Each category represents a different relationship with capital formation, risk tolerance, and value distribution.
Explorer is an early stage protocol that operates with centralized governance and unstable incentive-driven revenue. Some people, like Synthetix and Balancer, use short-term spikes, but their main goal remains survival rates rather than profitability.
Climbers begin their transition from emissions-based growth to user retention and ecosystem governance, with annual revenues between $10 million and $50 million. These projects need to navigate strategic decisions about growth and distribution while maintaining momentum.
Titans such as Aave, Uniswap, and Hyperquid generate consistent revenue, have a decentralized governance structure, and operate with strong network effects. Their focus is not diversification, but domination of categories. Due to Titan’s established Treasury and operational discipline, they can afford to implement token buybacks or other value turn programs.
In contrast, seasons are short-lived phenomena driven by hype cycles and social momentum. Projects like FriendTech and PumpFun have experienced short periods of short activities, but have struggled to maintain consistency in user interest and revenue over the long term.
Some may evolve, but most remain speculative theatre without enduring the relevance of infrastructure.
Revenue sharing model
Similar to the public stock market, the report states that younger companies usually reinvest their revenues, while mature companies return capital via dividends or buybacks.
In cryptography, this distinction is similarly linked to protocol maturation. While Titans are well positioned to implement buybacks or structured distributions, explorers and climbers are encouraged to focus on reinvestment until operational basics are secured.
According to the report, buybacks are a flexible distribution tool that is particularly suitable for projects with volatile revenue or seasonal demand patterns.
However, the report warned that poorly-executed buybacks could benefit short-term traders more than long-term holders. An effective buyback programme requires strong Treasury reserves, valuation discipline and transparent implementation. Without these, distributions could erode trust and misalign capital.
This trend reflects wider changes in traditional markets. In 2024, buybacks accounted for around 60% of the corporate profit distribution, exceeding dividends.
This approach allows companies to adjust their capital returns according to market conditions, but the risk of governance remains if the incentives that drive buyback decisions are misaligned.
Investor relationships are important
The report identifies investor relations (IRs) as a critical but underdeveloped feature across crypto projects. Despite the general claims of transparency, most teams selectively release their financial data.
Building durable trust with token holders and institutional participants requires more institutional approaches such as quarterly reporting, real-time dashboards, and clear token distribution disclosures.
Major projects are beginning to implement these standards. Aave’s “Purchase and Distribution” program is backed by the $95 million Treasury Department, which allocates $1 million per week for structured buybacks.
Hyperliquid spends 54% of its revenues on buybacks and 46% on LP incentives, using it alone on revenues without external venture funds. Jupiter introduced the Litterbox Trust as a non-obligatory mechanism to manage a $9.7 million JUP for future distribution only after reaching financial sustainability.
These examples show that responsible capital allocation depends not only on market conditions but also on timing, governance and communication. As token liquidity per asset continues to decline, pressure on projects to prove survival through cash flow and transparency could be increased.
