Buybacks and burns by exchanges are not new.

They have been running quietly for years, shaping supply and demand long before they drew mainstream attention. Almost every large CEX including Binance ($BNB), OKX ($OKB), Gate ($GT), KuCoin ($KCS), and MEXC ($MX) has operated some form of burn program for more than half a decade.

What has changed is how they are framed and marketed.

$HYPE (Hyperliquid) put buybacks at the center of its token strategy, not buried in the fine print. It turned burns into a defining feature rather than a background mechanic. More importantly, Hyperliquid runs them consistently and openly as part of the treasury process, setting a new benchmark for clarity.

That positioning made burns look novel, even though incumbents like Binance, OKX, Gate, KuCoin, and MEXC had been doing the same for years. The difference is they never marketed them as aggressively or integrated them as tightly into treasury operations (my thoughts on why did they so below).

Burns function as mechanisms of value transfer. They show:

• how an exchange connects token supply to its business model

• which levers drive scarcity (profits, formulas, or governance)

• how credibility is built or lost over time

Burns also act as inflation controls, offsetting token unlocks or emissions and stabilising supply over time.

The question now is no longer if burns will happen, but how consistently they are executed, and whether the model provides clarity to tokenholders.

To see the shift clearly, here’s a breakdown of how supply dynamics play out across exchange tokens.

🧠 Takeaway: When analyzing an exchange token, the burn model matters. Profit-based, formula-driven, and governance-controlled designs create very different outcomes for scarcity, predictability, and trust.

Burn models as operating systems

Exchange burn programs fall into three categories:

• profit or revenue linked (Gate, KuCoin, MEXC): a fixed % of earnings is used to buy and burn tokens. Cadence is predictable and auditable

• formula or treasury driven (Binance, OKX, Bitget): supply cuts are set by formulas or treasury allocations. Scale is larger, but the tie to business health is weaker

• governance driven (Bybit, HTX): cadence is decided through tokenholder votes. This decentralises control but introduces political and execution risk

Programs do evolve. For context: Binance it moved from profit-linked burns to a formula based on price and block counts, and later added BEP-95 gas fee burns. At points it changed the burn rate suddenly, presenting it as proof that BNB was not a security. From a regulatory view this made sense, since decoupling burns from profits lowers classification risk, but the shifting mechanism left markets uncertain.

Additionally, other CEXs also updated their dynamics, like:

• KuCoin tightened cadence to monthly for clarity

• Gate has kept its 20% profit-based allocation steady since 2019

With fixed max supply tokens, burns are less common. When they do occur, they’re valuable because they reduce circulating supply and accelerate the path to full supply compression.

🧠 Takeaway: The burn model decides durability. Profit-linked = steady and auditable. Formula = scalable but opaque. Governance = decentralised but harder to rely on. Sudden model shifts (Binance) create structural risk, while transparency moves (KuCoin) build trust.

Regulatory Angle

Burn models aren’t just economics. They’re also regulatory positioning.

In traditional equity markets, corporate buybacks have always been controversial. The SEC questions them for:

• market manipulation

• insider benefit

• weak disclosure standards

Token burns are crypto’s version of buybacks, but they run without those legal guardrails. That gap changes how models are designed.

• Profit-linked burns look most like buybacks. They invite closer regulatory attention, since they tie token value directly to profits.

• Formula-driven burns (Binance’s auto-burn, OKX’s supply cap) are easier to defend. They can be presented as mechanical, detached from revenue, and less likely to trigger securities classification.

• Governance-driven burns add politics. Regulators may see community votes as insufficient safeguards against manipulation

🧠 Takeaway: Burn design is part tokenomics, part legal defence. Decoupling burns from profits reduces regulatory risk, but it also reduces clarity for tokenholders.

Patterns across exchanges

Three clear patterns stand out:

1. scale with opacity

• Binance burns the most (~$1B/quarter) but keeps shifting rules.

• OKX eventually capped supply at 21M after years of cadence.

• Takeaway: scale commands attention, but rule changes and delayed caps dilute clarity.

2. steady profit-linked cadence

• Gate: fixed 20% of profits since 2019, ~60% supply removed.

• MEXC: 40% of profits, ~57% cut so far.

• KuCoin: moved to monthly cadence in 2022, but burn size shrinks with profitability (10% of profits)

• Takeaway: profit-linked models are most forecastable. Smaller burns = weaker business health.

3. new entrants and governance risks

• Bitget: $5B burn in Dec 2024, now ~30M tokens/quarter, aiming for 95% cut.

• Mantle: burned 98.6% of BIT in migration; now DAO-dependent.

• Takeaway: headlines do help, but only proven cadence builds durability.

Cadence, size, recurring burn quality

Supply cuts vary from ~30% at Binance to ~93% at OKX. But markets don’t price percentages alone. They price recurring burn size and the predictability of cadence.

• Gate, KuCoin, and MEXC: steady profit-linked burns → trust

• Binance: biggest numbers → blurred by constant formula tweaks

• OKX: reinforced confidence with $7.6B mega burn → backed by years of consistency

• Bitget: $5B burn → unproven first event, need to see how it evolves

• Crypto.com: reduced trust by reversing its 2021 burn in 2025

Note: The August 2025 mega burn coincided with a sharp rally in OKB, showing how one-off supply events can drive near-term price action at times.

🧠 Takeaway: I think one should don’t just track tokens burned. Rather we should ask: is scale repeatable? is cadence tied to profits? is governance stable? Focus on recurring USD burn per quarter/year. Mega burns = credibility markers, not guarantees.

Our overall view is that:

1. Consistency matters more than size. Markets reward repeatability for sure over making headlines

2. Profit-linked models are best-in-class. They tie token value to exchange health and are easy to evaluate (transparent)

3. Mega burns are only markers. Without follow-through, they fade into optics

Overall it seems that still buybacks are a major marketing expense for now.

But what's interesting is that implicitly, CEXs are choosing to recycle profits into their own tokens rather than hold retained earnings in cash or USDC. This concentrates treasury value in the token itself, magnifying both upside and risk at the same time.

Finally, as we tried to cover in the overall report as well, the real innovation is not in burns themselves, but in how consistently and transparently they are run. Hyperliquid definitely has reframed burns as a visible, recurring treasury function. That has actually reset expectations across the sector: scarcity alone is not enough now. Scarcity that is regular, clear, and aligned with exchange economics is what is super valuable now for all the exchanges, which changes the dynamics for many of these CEXs who very slow to move.