How to Tell If a Crypto Token Pays You: Buybacks, Burns & Governance (Crypto School Live Training)

Most people buy a token assuming it works like a stock. It usually doesn't. A protocol can generate real revenue every single day and none of that money ever touches the token you're holding. Before you buy, you need to know where the fees actually go — and whether any of them are routed back to holders.

Revenue Isn't Automatically Your Revenue

You can open DeFi Llama, see a protocol pulling in millions in fees, and conclude the token must be undervalued. That conclusion skips a step. Fees can flow to four different places: token holders, the treasury, liquidity providers, or a company that simply keeps them.

Only two of those reach you directly. Revenue paid out as real yield reaches you. Revenue used to buy tokens on the open market and burn them reaches you, because the supply shrinks. Treasury revenue might reach you — but only if governance votes to deploy it. Liquidity provider fees go to the people supplying liquidity, not to holders, so understanding how liquidity pools distribute trading fees matters before you assume a "high revenue" protocol is passing anything along.

The test Brian uses in the session: if this protocol doubled its revenue tomorrow, what happens to your token? If you can't answer that, you don't know what you own.

Buybacks and Burns: Check Scale, Not Headlines

Buybacks work the same way they do in equities — the protocol buys its own token on the open market. What happens next varies. The tokens might be burned, sent to the treasury, or paid to stakers.

Two things to verify. First, an announcement is not an execution. A press release saying a buyback is coming means nothing until you can see it happen on-chain. Second, check the scale against market cap. Fifty million dollars of buybacks sounds enormous until you realize it's 1% of a $5 billion market cap. Still decent — just not what the headline implied.

Burns have the same trap. A protocol burning 10 million tokens a year while emitting 30 million is still inflating by 20 million. That's the delta that matters, and you can verify it by tracking circulating supply over time rather than trusting the burn announcement. SaucerSwap on Hedera is a useful example of transparency here — a fixed share of every swap fee is routed to buying SAUCE on the open market, and the team publishes what was bought and what happened to it. If you want the background on how Hedera's largest DEX handles swap fees, that's a good starting point.

Governance-Only Tokens Are Options, Not Claims

A lot of tokens give you exactly one thing: the right to vote. No claim on cash, no claim on revenue. Direct fee sharing looks a great deal like a security, which may explain why so many projects launched this way.

That doesn't make governance worthless. Holders can vote to change the economics later — which is why a governance token functions more like an option on future revenue than a claim on current revenue. But it explains why a project can grow, ship, and dominate its category while the token price barely moves.

Building a Crypto Version of P/E

Once you know what actually reaches holders, you can price it. Take fully diluted value and divide it by the annual revenue that reaches token holders. Fully diluted value gives you a cleaner apples-to-apples comparison than market cap, because one token may have 20% of supply circulating while its competitor has 80%. If you're unclear on that distinction, the breakdown of market cap versus fully diluted valuation in crypto is worth reading first.

Compare only within a category, and only between tokens with similar business models and similar value-capture mechanics. That's when outliers actually mean something. If you're researching smaller-cap tokens and want to actually test one after doing this work, exchanges like MEXC list a wide range of early-stage assets — the guide to finding and researching altcoins listed on MEXC covers what's available and what the fee structure looks like.

Do the research before you buy, not after the drawdown. If you want to watch these sessions live and ask questions while the analysis is happening, Brian runs live training five days a week inside the Crypto School community at skool.com/crypto-profit, along with 120+ structured course videos for beginner through advanced investors.

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