Crypto projects should not buyback and burn tokens, revenue should build liquidity and yields

No, please don't use your revenue to burn your tokens, you're just throwing money away for a false sense of value in scarcity.

Scarcity aids high value pricing when we are dealing with products and/or services, but when it comes to money, liquidity and yield is more important.

A lot of people don't realize how much more valuable a highly liquid market is to one that's illiquid but volatile, even on the upside.

It's like what we see today with Bitcoin. Bitcoin is a highly volatile market because it lacks liquidity. I know, it sounds like a false statement but it's not. Surely, you can easily trade your $100 worth of BTC without stress but let's see how you do with $100,000 - $10,000,000. Are you confident you'll always get the full value of your assets upon trade settlement?

You most certainly will not. According to data from Livecoinwatch, Bitcoin's liquidity at the time of writing is about $1.53B, which is approximately 0.097% of the asset's market capitalization. Is that very liquid to you?

Forget about the daily volume that often tops $30-50B, it's mostly just market makers working overtime to profit off retail traders and some unsuspecting large traders, it's certainly not all organic trades.

The bigger problem? This liquidity is spread across numerous exchanges, further straining its effectiveness in handling large orders — which is why BTC is highly volatile. Another flaw is that said liquidity is dominated by centralized parties and that's a terrible layer of risk to have.

Bottom line, whilst Bitcoin is a highly valuable crypto asset, it doesn't have an impressive liquidity for its $1.58T valuation which is evident in how volatile it is. Stability is attained when deep liquidity is attained.

Moving on from Bitcoin, I completely understand why crypto developers or project founders often want to push for buying back and burning tokens. Frankly, I sort of admire the selflessness of such founders because others would just keep the revenue for themselves.

Notwithstanding, buybacks and burns are wasteful.

Your project’s crypto token is not a product, it's a store of value that's meant to both appreciate in value and attract direct revenue-based yields.

The focus of developers should always be to build for revenue, price appreciation comes naturally when people discover that your project is making money, is liquid and paying sustainable yield.

Buying back your crypto token is cool, but burning it after is not.

I, for one, support prioritizing deepening liquidity for crypto project tokens over burning supply.

When we buyback and burn tokens, we create pumps that will attract selling by current investors but the problem always is that the liquidity available generally may not change significantly and if sell offs are significant, the price will essentially crash to previous levels or further down and the purpose of the buyback and burns would be defeated.

Of a surety, some could argue that this is a short term reaction that in the long term, a shrinking supply would lead to price appreciation but that is false. Scarcity or low supply in itself means nothing. There are plenty of projects with much lower supply to Ethereum but they can't even dream of being worth as much as ETH is worth today.

It isn't merely supply that attracts investors, it's what the project offers or solves that is perceived or understood to hold market value.

People want to believe you will create value and attract revenue. This is why it is important for projects to focus on generating revenue and then turning that revenue into permanent liquidity and also a percentage into yields for token holders.

Give investors two incentives, the yield and the assurance of growing liquidity.

This is how we create sustainability and make said tokens attractive for new money coming into the industry at every point.

Everyone wants to be the next Bitcoin with having low supply so the token might be expensive but most run projects that would far benefit from having an expansive supply. Scarcity isn't something we should seek for currencies or tokens, it's not a handbag that can be expensive and its illiquid nature wouldn't be a problem.

The focus at all times should be revenue — perma-liquidity + yield.

Projects that adopt this and stick to it will be one of the best performers in the space, provided their solution appeals to a niche or active market.