CAYMAN ISLANDS Trends and Developments Contributed by: Jason Ta, Travers Thorp Alberga
fees, and an increasing number now do, a meaning- ful share is being directed to open-market purchases, burns, staking rewards or treasury accumulation. The models differ; the instinct is the same. If the protocol earns money, the token should not be economically irrelevant to that fact. Hyperliquid is the most-watched example. A substan- tial portion of the protocol’s economics is directed to a publicly visible on-chain treasury that acquires HYPE through open-market purchases. Hyperliquid also, pointedly, did not run a traditional venture-capital round; the token was distributed via airdrop to users. The result is unusually legible token economics: fees in, buybacks out, no obvious competing cap table. Other programmes rhyme rather than replicate it. Aave’s AAVEnomics proposals, Jupiter’s protocol- fee buyback plan, Maker/Sky’s surplus and repur- chase mechanics, and dYdX’s buyback-and-stake programme each take a different route to the same destination: making the relationship between protocol usage, protocol revenue and token value more visible. The buyback is not the only instrument. The toolkit is wider. Sky (formerly Maker) channels protocol revenue into a savings rate that flows directly to USDS holders, a distribution rather than a market purchase. Burn- based designs (Ethereum’s EIP-1559 base-fee burn, BNB’s quarterly burns and various L2 buyback-and- burn programmes) reduce supply rather than redistrib- ute it. Staking rewards funded by genuine fees replace dilutive emissions with revenue-backed yield. Hybrid models such as dYdX’s buyback-and-stake combine repurchase with restaking, locking acquired tokens to align long-term holders with protocol performance. Each design carries different tax, securities, account- ing and disclosure consequences. Choosing the right one is a structuring question, not an engineering one. The significance of these programmes is not that they may support secondary-market demand. It is that they give the market something to underwrite. A credible buyback policy creates a bridge between protocol activity and token valuation, and investors begin to ask recognisable questions: what fees are generated, what percentage is allocated, how discretionary the policy is, who controls the treasury, how transparent
execution is. These are not quite equity questions, and not quite commodity questions; they are token questions becoming more financially literate. This shift reflects a generational handover in toke- nomics design. The early 2020s playbook (venture round, modest community allocation, long unlock cliffs, token-generation event timed to peak atten- tion) worked beautifully for cap tables and less well for marginal holders. The emerging playbook is small- er venture rounds, broader community distribution, milestone-based vesting, clearer treasury policies and revenue-linked mechanics from the start. Founders raising in 2026 are being asked a better question: not how the token is distributed, but why it should accrue value at all. The legal questions are where the romance ends. Buybacks and revenue-linked mechanics need careful structuring. They affect securities analysis in relevant jurisdictions, with consequences for offering, market- ing and secondary trading. They affect tax: the entity buying tokens, the treatment of repurchased tokens, and the cross-border flows all need a clear view. They affect accounting: a token treasury is an asset, not a marketing budget. And they affect governance: someone has to decide when to buy, how much, from whom, with what conflicts, and under what reporting framework. In the Cayman Islands, much of this work increas- ingly sits in an ownerless foundation company: a no- shareholder vehicle whose directors owe duties not to economic owners but to defined purposes set out in its constitutional documents. The treasury policy is its constitution. A well-drafted policy specifies the source of funds, the proportion allocated to buybacks or distributions, the discretion afforded to directors, the conditions under which the policy can be amend- ed, the disclosure regime, conflict-of-interest provi- sions and audit arrangements. Adjacent structures (segregated portfolio companies, special-purpose subsidiaries, regulated affiliates) are deployed to ring- fence specific functions: trading execution, custody, settlement, communications. The on-chain treasury is increasingly run with the discipline of a captive insurer or a special-purpose finance vehicle. That is not legal
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