VLR Token Buyback Program

[Ignas]

Background

Velora rebranded from ParaSwap, introducing a major shift in positioning and functionality. Alongside this transition, the PSP token was migrated 1:1 into the new VLR token, which now underpins governance, staking, and ecosystem alignment.

With the rebrand, Velora moved beyond its role as a DEX aggregator to adopt an intent-based, cross-chain trading architecture, enabling improved execution, MEV protection, and broader ecosystem integrations.

Velora Performance

Following migration incentives and promotional campaigns, trading activity and volume have seen measurable growth, with PSP holders actively participating in the new Velora.

• Trading volume: In the past 30 days, Velora has processed $100M–$300M per day on average, with spikes above $820M. Cumulative trading volume surpassed $7B in September, boasting approximately $133B lifetime volume, which places Velora among the top DEX aggregators.

• Revenue: YTD protocol revenue is tracking at around $3.4M, with $741.6K earned in the last 90 days from trading fees. Revenue by epoch is volatile, peaking above $596K in an epoch. Recent epochs continue to deliver between $150K–200K. In general,

• Staking seVLR: Staking TVL sits at $4.3M, with 298.3M VLR staked by 635 unique stakers.

Data from https://dashboard.velora.xyz/public/dashboard/

Legacy Revenue-Sharing Models

Under PSP / PSP 2.0, 80% of protocol revenue was distributed to stakers in ETH (mostly via sePSP2).

That created strong direct incentives for stakers, but it also introduced structural problems: limited treasury flexibility, weak direct demand for the token (since revenue is paid in ETH), and scaling friction for growth investments.

Below unpacking the pros and cons of the current seVLR revenue-sharing model

1. Pros:

• Token stakers receive a clear, recurring economic benefit tied to protocol performance.
• seVLR encourages protocol participation (liquidity, governance, actions).
• Distributing revenue visibly shows revenues are real and flowing to users.

2. Cons:

• Weak linkage to protocol performance value:

80% of protocol revenue is shared with stakers. This design mainly rewards holding rather than creating organic demand for PSP. Revenue growth benefits existing stakers, but it doesn’t inherently drive new token purchases or strengthen long-term price support.

• Treasury, reinvestment, and liquidity limitations

Allocating 80% of revenue directly to payouts leaves the DAO with minimal runway to invest in critical areas such as R&D, security, marketing, ecosystem incentives, and opportunistic growth. In periods of market stress, the DAO lacks the financial buffers to maintain incentives or absorb unexpected costs.

• Operational friction & costs

Distributing ETH on Ethereum periodically is gas-heavy and costly to execute at scale. Converting heterogeneous fee flows into ETH requires swaps, slippage, and accounting complexity.

• Accessibility & complexity

The sePSP model and fee-sharing mechanics are harder for casual users to understand and adopt, limiting broad participation.

• Scalability and liquidity constraints

The legacy revenue-sharing model restricts the DAO from seeding liquidity on other networks (e.g., Base), limiting its capacity to expand reach, sustain market depth, and remain competitive across ecosystems.

A rigid high revenue share to stakers is hard to scale as the protocol expands across chains. Lack of other distribution avenues beyond just incentives also gives less incentives for ‘early’ stakers, versus also supplementing it with token rewards.

A Buyback Mechanism for Velora

Industrial Examples

1. Hyperliquid

Hyperliquid has built one of the most aggressive buyback-and-burn mechanisms in DeFi. The protocol directs nearly all trading fees into its Assistance Fund (AF), which automatically recycles revenue into daily HYPE buybacks on the native HYPE/USDC order book.

Structure & Execution

• Revenue source: Trading fees collected across HyperCore and HyperEVM
• Buyback: ~$3–3.5M in HYPE purchases per day (~63K HYPE). ~$23M in weekly buybacks, directly proportional to fee revenue.
• Burn mechanism: A portion of purchased HYPE is sent to a burn address, permanently reducing supply.

Impact & Results (as of September 2025)

• In the past 30 days, HyperCore has generated revenue exceeding $110.3M. AF has spent over $100.57M on HYPE buybacks, acquiring around 2.13M HYPE at an average price of $47.90.
• On a daily basis, this equates to roughly $3–3.5M in HYPE bought per day (~63K tokens daily).
• Over a 7-day window, the fund consistently absorbs over $23M of supply, showing the system’s throughput is directly tied to trading volume and fee generation.

From late 2024 to September 2025, Hyperliquid has permanently burnt over 409.9K HYPE (~0.041% of supply), at a rate of ~1.4K HYPE (~$82,000) per day. The annualized burn amount rate is around 0.05%.

The effect is a powerful flywheel: higher trading activity generates more fees, which drive larger buybacks, while steady burns enforce long-term scarcity. As a result, Hyperliquid’s HYPE token has appreciated from ~$15 in March 2025 to ~$58 by mid-September 2025, with the AF acting as a constant source of buy pressure in the market.

2. Aave

On April 9, 2025, Aave DAO approved a $1 million weekly token buyback initiative with overwhelming support, 439,000 votes in favor vs 2,020 against. This initiative was launched in response to a ~21% decline in AAVE’s market value (trading around $120 at the time) and aims to reinforce tokenomics and long-term incentive alignment.

Structure & Execution

• Initial Allocation: $4 million for the first month.
• Ongoing Commitment: Up to $1 million worth of AAVE repurchased weekly for six months.
• The six-month timeline can be extended by governance if results prove favorable, as seen in past programs like Merit.

Impact & Results (as of September 17, 2025)

• Total buyback: 87,894 AAVE (~0.5% of total supply)
• Total spend: $21.05 million
• Profit: $4.93 million
• Emissions are reduced by 50%, strengthening AAVE’s tokenomics. Onchain data shows increased accumulation and reduced sell pressure. Positive price and TVL trends observed since the buyback began.

To build on the momentum of the current program, the DAO could consider making buybacks a permanent fixture at or near current levels ($500K–$1M per week). Regular buybacks would reinforce market confidence in AAVE, ensure protocol revenues flow back to tokenholders, and provide a stable foundation for long-term tokenomics.

3. Sky Ecosystem

In 2024, MakerDAO rebranded as the Sky Ecosystem and migrated its governance token from MKR to SKY at a fixed rate of 1 MKR = 24,000 SKY. The protocol continues the Smart Burn Engine (SBE), an automated mechanism that ties protocol revenues directly to SKY buybacks and burns.
Structure & Execution

• Revenue source: Stability fees and real-world asset yields flow into the Surplus Buffer (USDS).
• Trigger: Once the buffer exceeds the activation threshold (1M USDS, vow.hump), the Surplus Buffer Splitter (SBE) deploys fixed increments (10k USDS, vow.bump) every ~36 minutes (splitter.hop).
• Allocation: Each increment is divided into three streams:
  • 25% → SKY accumulation (held by the protocol treasury)
  • 75% → SKY staking rewards (distributed to stakers).
  • Burn rule: 25% of each vow.bump (2,500 USDS) is routed to the legacy Flapper contract, which swaps USDS for SKY on the open market and burns it.
• Daily Quotas: Governance requires the Splitter to guarantee 100k USDS/day of SKY buybacks and 300k USDS/day of SKY staking rewards. If normal flows fall short, parameters adjust to meet these minimums.

Impact & Results (as of September 2025)

• Total Spent: ~$76.5M USDS
• Total SKY buyback & burned: ~1.193B SKY (~4.2% of supply)
• Average buyback price: $0.0641 SKY/USDS.
• Daily Buyback/Burn: 1–3M SKY (~$70–100k notional).
• Treasury performance: ~17.25% gains on past purchases.

SKY has traded between $0.037 and $0.094 over the year, and the program has proven profitable: the treasury shows ~17.25% gains on past purchases, reinforcing the reflexive cycle where protocol growth → surplus expansion → larger buybacks → stronger token value.

Our suggestion

As the protocol continues to mature, we are now opening a community discussion on introducing a token buyback program with multiple approaches for governance to consider.

We suggest initiating the buyback of VLR in the open market. The purchased VLR will be used to build the protocol treasury, distribute to seVLR stakers, and seed liquidity on supporting DEXs to increase TVL onchain for VLR.

The model will create a self-reinforcing loop:

Product improvements & incentives → Higher trading volume & integrations → Revenue growth → Stronger token demand/price via buybacks → More protocol adoption & mindshare → Further trading volume growth → More revenue

• Buybacks create direct demand for VLR, potentially supporting price stability in weaker markets.
• Buybacks signal strong fundamentals and increase confidence among token holders and DAO.
• Buybacks balance between reinvestment in growth and direct returns to token holders.
• As Velora expands multi-chain, a structured buyback program can strengthen its reputation as a sustainable and community-aligned DeFi protocol.

If Velora introduced a token buyback, it would become the first cross-chain intent-based trading aggregator to execute a token buyback mechanism.

Key Considerations

1. VLR Treasury

Preserving a strong treasury from token buyback is essential for Velora’s resilience and long-term positioning. A well-funded treasury allows the protocol to:

• Sustain growth and operations during market downturns.

• Finance ecosystem partnerships, integrations, and security providers.

• Maintain flexibility to capitalize on strategic opportunities as they arise.

2. Burning vs Non-Burning

During Velora’s growth phase, we see merit in not burning purchased VLR immediately, instead recycling them into incentives and liquidity programs. This facilitates token movement from weak hands to aligned partners while mitigating opportunity cost.

In the longer term, once Velora enters a more mature growth stage, burning may become preferable to reduce supply and entrench value accrual.

Conclusion

This research aims to open a discussion on whether and how Velora should introduce a VLR token buyback mechanism.

By weighing the trade-offs and opportunities, Velora DAO can develop a strategy that supports both Velora’s long-term growth and tokenholder value.

We appreciate your feedback on this matter.

[jameskbh]

Interesting direction — but a few questions come to mind before moving forward.

How exactly would the buyback be funded? The treasury is already heavily skewed toward VLR — does it make sense to use other assets to buy even more, or would that reduce flexibility for growth and operations?

Is there solid evidence that buybacks at Velora’s scale would have a lasting impact on price, or do we risk a short-term pump followed by renewed sell pressure?

The current model pays stakers in ETH, which aligns incentives by removing VLR from circulation. If rewards shift to VLR, wouldn’t that encourage selling instead?

Aave launched its buyback only after securing a strong treasury and stable revenues — Velora may not be there yet. Wouldn’t it be better to first build reserves and liquidity depth before committing to this mechanism?

Overall, the idea is worth exploring, but it needs clearer funding logic and data on real price correlation before it can be justified.

[Julio]

@Ignas

This research aims to open a discussion on whether and how Velora should introduce a VLR token buyback mechanism.

First I would like to thank Ignas to start this discussion.

The buyback of VLR in the open market looks like a good thing for the reason explained in the thread.

I would go for the Sky Allocation:

@Ignas

Allocation: Each increment is divided into three streams:

• 25% → SKY accumulation (held by the protocol treasury)
• 75% → SKY staking rewards (distributed to stakers).

I also agree with the fact that burning may be a good option in the future, but not now.

Finally, as @jameskbh , I am interested to know how the buyback would be funded? But regarding the treasury, I am in favor of only VLR token.

[PGov]

We are overall supportive of a VLR buyback program as a way to return value to long-term contributors and signal confidence, but it will work best with clear guardrails. Concretely, we’d suggest tying buyback capacity to a transparent formula based on realized, audited protocol revenue and a minimum treasury runway buffer. Execution should follow pre-announced rules using TWAP or batched auctions to minimize slippage and information leakage, with a neutral executor and clear reporting (Octav?)

Reading some initial comments, a buyback can reduce float in the short term, but without parallel efforts to deepen liquidity and improve fundamental demand for VLR utility, it risks being a reflexive, temporary boost. Maybe we create the program with market-structure improvements such as seeding on-chain liquidity with objective inventory bands, or incentives for time-bounded liquidity provision.

Also we’d recommend a quarterly governance review with a sunset clause: the program expires unless re-authorized, after a summary on total buyback spend, average cost versus benchmarks, effects on circulating supply and liquidity depth, and any halts triggered by guardrails. Add pre-defined pause conditions (e.g., material security incidents, sharp revenue drawdowns, abnormal spread widening) and a hierarchy of capital allocation that prioritizes security, core growth, and only then buybacks.

Thanks @Ignas for the exciting post!

[Benibauer3]

The token buyback program represents an important strategic step toward strengthening VeloraDAO’s economic foundation and reinforcing confidence in the token. Beyond the immediate impact on liquidity and perceived value, a mechanism like this can serve as a valuable alignment tool across DAO stakeholders, supporting more stable and sustainable governance in the long run.

It would be great to consider a structure that combines transparency and predictability, with clear parameters around frequency, volume, and the sources of funds used for buybacks. This would allow the community to follow progress openly and turn the initiative into a continuous treasury management policy, rather than a one-off action.

Overall, this proposal feels like a positive and mature move for the DAO, balancing incentives, enhancing trust, and helping position the DAO as a more resilient and strategically aligned ecosystem.

[Sov]

Thanks @Ignas for starting this discussion. The 80/20 split does limit treasury flexibility, so I appreciate the creative thinking here. A few questions on the mechanics:

• Treasury voting power: If we continuously accumulate VLR in the treasury, we’re centralizing governance. How do we handle voting power on those tokens?
• Why not just adjust the split?: If burning isn’t happening and we’re redistributing bought tokens anyway, why not just move to 70/30 or 60/40 and fund the treasury directly?

Open to the idea, just wanted to see what your thoughts are on these points!

[Laita]

We would like to thank the Pink Brains Research team for this thorough report on the complex topic of token buybacks. Due to the potential implications of such a decision, a complete understanding of the different methods of implementation in other protocols can help with the creation of a new incentive system that is best aligned with Velora’s growth strategy.

Based on the examples that have been brought forward, we believe that the best way to implement a buyback system would be a hybrid approach based on key metrics such as generated revenue and current FDV. A certain amount could be re-distributed to users (perhaps in seVLR to maximise liquidity and ensure auto-compounding for users), while any excess could be kept in treasury. The reason we prefer this method of distribution over the current one is to ensure long-term volume and involvement of the VLR token beyond the initial staking action, as currently after the user has staked there is little more involvement with VLR and its ecosystem.

Thanks to the implementation of advanced features in Velora Delta, all buys in the future could be performed directly through the protocol. These can then be shared transparently in the DAO by the entity responsible for buyback and distribution.

Finally, we would like to clarify that VLR accumulated in the treasury does not participate in governance, and thus is not a centralizing factor. This has not been the case for the past 4 years of Velora DAO, and is never the case when it comes to protocol treasuries.

We look forward to seeing future discussions on the implementation and other factors to consider for a potential future proposal!

[SEEDGov]

Thank you @ignas, for bringing this highly valuable and impactful strategic topic to discussion!

This is a very timely issue given the Projet Miró stage and the VLR launch, and although not decisive, it’s worth noting the recent poll shared on Velora’s Twitter, which shows broad community support for implementing a buyback mechanism.

We have a couple of questions regarding your suggestions and the open points you raised on how to structure such a mechanism. As you correctly explain in your post, currently around 80% of the protocol’s revenue is distributed in wETH to stakers through the PSP 2.0 fee distribution system -see here-. Therefore, implementing a buyback mechanism would require modifying this system, effectively reducing the APY that stakers currently earn. This would not necessarily be negative for them, since the goal of introducing a buyback is to create buying pressure on VLR, which could drive price appreciation, benefiting stakers even more than the potential reduction in the reward rate. Nonetheless, this is a topic that calls for careful consideration and a well-thought-out decision.

With that in mind, have you considered or formed an opinion on how the current reward distribution system could be adjusted? How much of the 80% of revenue currently allocated to staking rewards do you think would be reasonable to redirect toward a buyback mechanism?

[Tane]

Thank you, @Ignas, for the detailed research and for initiating the discussion!

At the moment, we don’t think it’s reasonable to add a new buyback program on top of the existing staking scheme without reducing the budget for the staking, given that around 80% of protocol revenue is already distributed to stakers. Increasing that allocation further would weaken the DAO’s ability to fund long-term growth, R&D, and ecosystem development.

However, within that 80%, reallocating a portion from staking rewards toward buybacks could be meaningful. The goal should be to find the most effective way to return value to tokenholders within the existing budget, rather than adding new outflows.

Buybacks work differently from staking. They tighten supply, while staking drives demand. Both influence the token price, but from opposite directions. A balanced mix of the two could create a healthier token economy. There is also empirical evidence from projects like Jito showing that periods with active buybacks correlated with stronger token performance, suggesting that buybacks can positively affect market confidence.

Since staking yields inherently carry downside risk from VLR’s price volatility, buybacks could help mitigate that risk and, in turn, make staking more attractive. Practically, starting with simple market-based buybacks would make sense, but in the longer term, mechanisms such as epoch-based auctions using VLR as the bidding asset could make treasury operations more efficient.

In summary, we are against introducing buybacks as an additional expense on top of staking, but support redirecting part of the existing staking allocation toward buybacks to manage downside risk and improve capital efficiency. Experimental pilots and data-driven iteration would be valuable next steps.

[Eren_DAOplomats]

Thanks for putting this together, really solid research. The breakdown of the old model’s flaws is spot on.

A buyback makes a ton of sense on paper. My only hang-up is that the examples Hyperliquid, Aave, Sky have very different, and often more stable, revenue streams. The aggregator fees can be pretty spiky, so a direct copy-paste might not work.
It would be great if we can model this out using last quarters revenue and see what the daily buy pressure would look like. I’m all for the no-burn approach. Let’s use the money for growth

[Avantgarde]

Thank you Ignas for your effort in bringing this idea forward to the DAO!

Buybacks are definitely a hot topic in the crypto space right now. As you mention, there are plenty of established protocols that have implemented buybacks and arguably done so relatively successfully, seeing how those tokens have generally performed well (though we don’t have the exact data on the impact of buybacks themselves on token prices vs say as a second-order effect of hype).

However, Velora is still significantly smaller than the compared protocols, and it doesn’t seem 100% accurate to compare them given the difference in revenue. We are not against the idea entirely, especially at a future date, though at this stage of Velora’s growth we think that there are probably better ways for spending those funds to help the protocol grow rather than buying back the token.

If implemented, how much impact do we estimate this buyback program to have on the VLR price?

Given the somewhat limited treasury funds available, instead of a buyback, we suggest focusing on strategies that drive direct and measurable growth, user acquisition, and, consequently, greater revenue.

We nevertheless appreciate that this has been brought to the DAO as we too were keen to hear where other delegates stand on the issue.

[citizen42]

Thanks to @Ignas and the Pink Brains team for this thoughtful discussion, it is indeed timely and an evolution for Velora as we solidify our position in DeFi. The analysis of some of the legacy revenue-sharing pro’s and con’s and all examples provided is spot on imo, its the comparison we need and serves well in highlighting how buybacks can create a flywheel of demand, stability and growth, although we ourselves size wise are not quite there yet but on path….

I appreciate the constructive dialogue so far. @Tane 's point on reallocating within the 80% staking budget to avoid straining the treasury resonates, as does @Eren_DAOplomats call for revenue-based modeling to handle “our” spikiness. @jameskbh raises valid questions on funding and lasting impact, while @PGov , @Benibauer3 ,@Sov and @Laita emphasises guardrails, transparency and hybrid mechanics to prevent centralisation or short-termism.
Overall, the consensus leans toward a measured approach that enhances tokenomics without disrupting our core incentives.

As a delegate and Velora Growth Committee member, I’m supportive of the discussions core and trajectory and I feel using fees for open-market VLR buybacks to build treasury reserves, reward seVLR stakers, and/or seed multi-chain liquidity strikes a cord, without neglecting our current size or overburdening treasury and so I am somewhat inclined towards @Laita 's hybrid model, tying buybacks to revenue/FDV metrics for adaptability with redistribution via seVLR to drive ongoing ecosystem involvement beyond initial staking. It cleverly addresses the “post-stake inertia” while keeping a portion in treasury, seVLR non-voting.

To elaborate further without steering from the topics intents, we could build on examples from protocols like Etherfi (revenue-funded buybacks boosting staking) and Lido (POL for long-term liquidity stability). A novel twist could be a split allocation hybrid: After buybacks, direct ~60% of acquired VLR to seVLR stakers that auto-compound rewards (enhancing yields and demand, per Laita’s suggestion) and ~40% as Protocol-Owned Liquidity (POL) held in the treasury as seVLR. This POL tranche would generate passive ETH yields for reinvestment into growth and/or R&D, while remaining locked and non-voting to avoid governance centralization.
It could be a fresh take, blending deflationary pressure with yield-generating treasury assets, not widely seen among players like us but inspired by DeFi trends where buybacks fund hybrid staking/POL models for resilience.

Additionally, to optimise alignment across the ecosystem, I would dare to propose but lets take it with a pinch of salt, bringing in service providers to the table with some skin in the game akin to PoS mechanisms where validators bond assets for accountability, we could require service providers to stake a minimum VLR like 10k seVLR to operate within Velora.

Last but not least I’m inclined for a pilot approach: Model last quarter’s revenues for buyback simulations, implement with PGov’s suggested TWAP auctions and quarterly reviews add on top sunset clauses and pause triggers for revenue dips.
This keeps us agile, transparent and focused on long-term value.

Excited to hear thoughts from the community, does this split/POL hybrid resonate, or how might we refine the service provider approach, obviously if it wouldnt hinder current growth/onboarding initiatves!

Awesome discussion! Let’s strengthen Velora for all stakeholders.

[Mehdi]

First, I appreciate @Ignas for bringing this topic into the discussion to evaluate various aspects of the mechanics. Since this is a research and discussion, I try to share my research and feedback in multiple parts to incorporate other delegates’ feedback and Laitalabs into the final suggestion. CryptoRank just recently shared some information about the projects that implemented buybacks—you can find the full details here, but I’ll start with the original tweet.
https://x.com/CryptoRank_io/status/1978873211174687059

As you can see, there are only 2 projects that are marked as successful after implementing the buybacks.
But why did the others fail, or at least get listed as failed? I decided to categorize some properties of each project mentioned here to gain a better understanding of why they failed. As you know, the most basic rule for price appreciation is: demand must surpass supply. So, starting with the table below.

(We should note that there are other key metrics we should analyze for final price action, such as the altcoin market situation, sector overall performance, project adoption, etc.)

Now, let’s divide them into multiple groups that share the same properties.

Hyperliquid: One of the strongest forms of buybacks, with one of the highest revenues in the market (~$99.89M in the last 30 days, annualized to $1.22B). Although it’s categorized with high team tokens, they haven’t hit the market yet—the next major unlock isn’t until November 29, 2025.

**Aave:**On Aave, there’s no token sell pressure from team/investors, emissions are very low (~3.25% annualized, offset by deflationary buybacks), and revenues are solid (OK to high at ~$14.12M in the last 30 days). So, it’s considered successful, with net gains of +94% since inception.

Jupiter, Ethena, Etherfi, and Pump.fun have high investor/team token unlocks along with some emissions, so buybacks aren’t enough to have stronger effects on the price. For instance, Jupiter’s monthly cliffs (next on October 28, 2025: 53.47M JUP) and high emissions outpace its buys, while Ethena’s predetermined high issuance adds dilution despite $1.71M monthly revenue.

AERO: has no unlocks from the team but comes with high emissions (weekly minting decaying 1% per epoch, up to 52% annualized). Based on the price performance and the timing of the implementation (starting February 5, 2025), it avoided heavy sell pressure, and the price could hold on—so I also found this one successful. If there were no buyback in place, considering the high emissions in play, the price wouldn’t be here today.

Sky: In the first tweet, it’s called a failure, but I don’t see it this way. The situation is so like Aave’s—none unlocks, high utility, no emissions, and high revenue ($16.27M in the last 30 days)—but they implemented the buyback before the market decline of altcoins (February 24, 2025, vs. Aave’s April 9). They have the same properties in my table, but one is called successful and the other a failure, which I would call successful. Sky’s mechanism has burned ~5% of supply YTD through revenue-tied daily buys ($1M USD worth), fostering real deflationary pressure.

To better see this, let’s look at the chart of TOTAL3, which tracks the market cap of altcoins, here.

As you can see, Aave started the implementation when altcoin markets were in a local low (post-Q1 stabilization), while Sky launched at a local high (mid-bull run), so the timing behaved differently in the final price action—exposing Sky to more downside from the summer lull and October crash, despite structurally sound design.

Raydium’s properties somehow look like Velora’s : low emissions (134,649 RAY/day, stretched over 40 years), almost zero unlocks from team/investors, acceptable token utility (fee claims, staking, IDOs), and low-to-moderate revenue ($3.52M in the last 30 days).
The big difference here that made Raydium a failure is the size of the market cap (FDV ~$968M), where its revenue is insufficient to make a significant price appreciation—unlike Velora’s leaner post-rebrand setup.

Velora: Post-rebrand, Velora has no unlocks from team/investors. Emissions are low to moderate (DAO operational costs are considered part of the emissions). Revenue is low to moderate, and token utility is OK.

Conclusion:
The brief research above is based solely on a basic supply-and-demand perspective and should not be used as the only point of reference. As explained, Velora benefits from not having two of the most common supply-side pressures for a token: team/investor unlocks and heavy emissions.

The most effective buyback results occur when there is consistent and sufficient revenue, combined with minimal emissions and no upcoming team or investor unlocks. Fortunately, all team and investor tokens have already been unlocked in past years, and current emissions remain at moderate levels. However, we should simultaneously focus on strengthening the revenue side.

It is difficult to predict or model the potential impact of buybacks on the token, as the DAO has not yet reached a consensus on implementing such a mechanism—or on which form it should take (buyback-and-burn, buybacks to the treasury, or a hybrid approach).

Based on current information, a reasonable assumption is that buybacks would help reduce existing sell pressure on the $VLR token. However, to achieve a stronger effect, higher and more consistent revenue streams are required. While some may associate buybacks with an “up-only” scenario, establishing a price floor or mitigating sell pressure would already represent a successful outcome. Ultimately, buybacks are just one of several factors that can influence price appreciation.

[Curia]

Thanks @Ignas for putting this forward!

We are supportive of introducing a structured buyback mechanism for Velora. It is one of the clearest ways to connect protocol performance with tokenholder value and demonstrate long-term conviction in the system. Across DeFi, we have seen how well-designed buyback programs can evolve from short-term narrative tools into core monetary policies that sustain ecosystems.

Recent research shared by @Mehdi highlighted how buyback outcomes across protocols have varied depending on emissions, unlock schedules, and market timing. As seen in CryptoRank’s analysis, only a few projects such as Aave and Aero were considered successful after implementing buybacks. Others like Jupiter, Raydium, Ethena, and Pump.fun faced headwinds from heavy emissions and upcoming unlocks that outweighed the impact of their buyback programs.

Jupiter, for example, has monthly unlocks exceeding 50 million JUP tokens, and Ethena’s high issuance schedule adds dilution despite generating meaningful revenue. Raydium, which in many ways resembles Velora with low unlocks, a long emission schedule, and solid token utility, still struggled because its fully diluted valuation of roughly 968 million dollars was large compared to its 3.5 million dollars in monthly revenue. Even with buybacks, the revenue was not sufficient to offset supply pressure.

Velora, after the rebrand, begins from a healthier baseline. There are no remaining team or investor unlocks, and emissions are low, with most of the outflow tied to DAO operational costs. This puts Velora closer to projects such as Aave and Sky where stable revenue and minimal dilution allowed buybacks to create meaningful deflationary pressure.

Program	Description	Approx. Monthly Cost (USD)
Delegate Incentive Program (DIP)	Monthly rewards for active DAO delegates	$21,600
Laita	Core service provider (governance tooling, reporting, and DAO ops).	$60,000
Mimic	Treasury automation and transaction management.	$4000
SEEDGov (Governance Task Force)	Delegate coordination, proposal evaluation, and governance ops.	$10,000
WakeUp Labs	Reward automation infrastructure and maintenance.	$1,200
Avantgarde	Treasury management	$900
Velora Growth Committee (VGC)	Quarterly retroactive compensation for growth initiatives.	$12,000
Total		$109,700

*Please note that this figure is an estimate and may not reflect the exact amount.

Data (last 90 days):

Total protocol fees: $2,443,350

20% of protocol fees go to the DAO Treasury

$2,443,350 × 0.20 = $488,670

Since 90 days ≈ 3 months:

$488,670 ÷ 3 = $162,890 per month

At present, Velora’s position is net positive. The DAO earns around 162,000 USD per month in protocol revenue, representing 20 percent of total fees, while spending approximately 110,000 dollars per month across operations including Laita, SEEDGov, Mimic, WakeUp Labs, Avantgarde, and the Delegate Incentive Program. Eighty percent of fees currently go to stakers and twenty percent flow to the DAO treasury.

If a buyback mechanism is to be introduced, the first question is where the allocation should come from. One approach would be to slightly reduce the staker share and dedicate a portion toward buybacks and burns. Another option would be to maintain the current 80 percent staker allocation and use part of the DAO’s 20 percent share for periodic buybacks. Each path has trade-offs. Reducing the staker share could lower yield in the short term but create deflationary pressure that benefits all holders through price appreciation. Keeping staker rewards unchanged preserves yields but limits treasury flexibility.

Both approaches have advantages, and the choice depends on whether the DAO prioritizes yield stability for stakers or long-term token scarcity and holder value.

The Sky model offers a strong reference point. Its buybacks are funded from protocol surplus, with roughly half of repurchased tokens burned to create scarcity and the other half returned to the DAO treasury to fund development, grants, and liquidity programs. In 2025, Sky achieved a 5.6 percent annual buyback-to-FDV ratio, effectively offsetting inflation and linking token value directly to measurable revenue. Aave produced similar results by maintaining high revenue and low emissions, resulting in consistent price appreciation.

A potential design could allocate around 20 percent of total protocol fees to a buyback pool executed quarterly or continuously, with repurchased VLR tokens divided roughly 60 percent for burning and 40 percent for returning to the DAO vault to support future incentives and grants.

While short-term market conditions will continue to influence token performance, Velora’s structure of low emissions, no unlocks, lean valuation, and growing revenue places it in a strong position to benefit from a buyback program.

In conclusion, we believed buybacks should be viewed not as a quick path to price increases but as a means to stabilize value, strengthen market confidence, and align long-term incentives. The key discussion for the DAO is whether to finance buybacks by adjusting the staker share or using the existing DAO allocation. Both paths offer benefits and trade-offs, and finding the right balance between staker yield and token scarcity will determine how effectively Velora translates its operational strength into lasting value for all participants.