Sky token buyback raises price but triggers fierce debate on market sustainability

Crypto protocol Sky has poured $75 million into a Sky token buyback program since February 2025, driving its token price up by 8% despite broader market volatility. The project, formerly known as Maker before its August 2024 rebrand, confirmed on Monday that it spent 5.5 million of its USDS stablecoin in August to purchase 73 million SKY tokens.

The program, which began on February 24, has steadily reduced circulating supply, a common approach among crypto projects looking to stabilize or boost token values. At launch, SKY traded just above $0.063 and now hovers around $0.068, according to CoinGecko data.

“Token buybacks are becoming a tool for signaling confidence to investors,” — Daniel Roberts, Analyst at Messari. “But whether the impact lasts depends on adoption, not just reducing supply.”

SKY performance compared to peers

Since the Sky token buyback began, SKY has risen 8.1%, though performance has been uneven. The token reached a high of $0.096 in July, just shy of its December 2024 peak of $0.10, before retreating alongside broader market declines. Unlike rivals, SKY failed to recover during the mid-August rebound.

By contrast, Uniswap’s UNI gained 6% and lending platform Aave’s AAVE jumped 25.8% over the same period, reflecting stronger momentum in decentralized finance markets. This comparison raises questions over whether buybacks alone can sustain long-term growth.

“An 8% bump is modest compared to peers,” — Laura Shin, independent crypto journalist. “Investors will want to see fundamentals, not just financial engineering.”

Other platforms embrace buyback schemes

Sky is not alone in turning to buybacks. On Monday, World Liberty Financial, a crypto platform linked to the Trump brand, proposed using all protocol fees to buy back and permanently destroy its WLFI token. Despite dropping 16% to $0.23 within its first 18 hours of trading, early investors still enjoy gains of more than 1,400% from a launch price of $0.015.

Meanwhile, memecoin platform Pump.fun has executed one of the largest buyback initiatives in the sector. Since mid-July, it has spent $66.5 million in revenue to repurchase its PUMP token. The strategy has paid off in the short term, lifting the token nearly 70% from its July 29 all-time low.

These examples highlight a growing trend where token projects use buybacks as a market support mechanism, echoing traditional stock buybacks in corporate finance.

Analysts caution, however, that token buybacks carry significant risks. Unlike corporate share repurchases, which are backed by audited earnings and legal protections, crypto buybacks depend entirely on project revenues and the discretion of developers.

“Buybacks can prop up prices temporarily, but without sustainable demand, they risk becoming little more than marketing tools,” — Alex Thorn, Head of Firmwide Research at Galaxy Digital.

Still, advocates argue that buyback schemes reflect a maturing industry borrowing tools from traditional finance. By reducing circulating supply, projects aim to create scarcity while signaling confidence in their platforms’ long-term prospects. This narrative has resonated particularly with retail traders, who see buybacks as a form of value return comparable to dividends or stock buybacks in equities.

The critical test will be whether buybacks translate into lasting stability or simply fuel short-lived speculation. If revenue streams falter or market sentiment turns, projects relying heavily on repurchase promises could face liquidity crunches. As more platforms adopt the model, investors may need to scrutinize the financial underpinnings of buyback claims rather than assuming they guarantee price appreciation.

Long-term impact of Sky token buyback uncertain

While the Sky token buyback has so far delivered moderate price gains, analysts caution against assuming the strategy guarantees sustained growth. Buybacks can boost sentiment temporarily by reducing supply, but long-term value depends on user adoption, ecosystem development, and regulatory clarity.

According to Sky’s own dashboard, its February buyback alone cost $4.28 million, underscoring the scale of resources required to maintain such programs. With competitors like Aave and Uniswap outpacing SKY in recent months, the effectiveness of buybacks as a standalone strategy remains debatable.

“Buybacks help set a floor, but they don’t create new demand,” — Michael Carter, Head of Research, CryptoCompare. “Projects need real-world use cases to justify valuations.”

For investors, the Sky token buyback underscores a key lesson: while tokenomics can influence short-term pricing, the sustainability of returns lies in adoption and utility. As more projects adopt similar strategies, the question remains whether buybacks will evolve into a long-term stabilizing mechanism or remain a short-lived market signal.