The native token of GMX, the decentralized perpetuals exchange built on Arbitrum, is in the middle of a rally after its governing body approved an overhaul of its buyback strategy over “limited effectiveness.”
The overhaul follows a public admission that its two years of token buybacks have done little to move the market.
The token is trading at $7.61 as of the time of writing, an 18.2% increase over the preceding month, as traders absorbed the implications of one of the more candid self-assessments seen from a decentralized autonomous organization in recent memory.
The GMX DAO’s Buy Back and Distribute program has repurchased more than 2 million GMX tokens since the end of 2024, a volume roughly equal to the total circulating supply across centralized and decentralized exchanges at the program’s inception.
The price, nonetheless, remained suppressed. The DAO came to the conclusion that the culprit was liquidity and structural supply dynamics on centralized exchanges that no amount of open-market buying could offset.
What is the GMX DAO actually changing?
The new plan by the GMX DAO will consolidate liquidity by withdrawing approximately 600,000 GMX tokens from treasury-controlled positions on Uniswap and Trader Joe, and then redeploying them into GMX’s own liquidity pools and its Solana-based platform GMTrade.xyz. According to the protocol, it will be targeting around 2% of the market cap in combined on-chain depth.
Secondly, all staking rewards will not be distributed directly to holders but redirected to the treasury, effective from Wednesday, March 4.
Those accumulated rewards will only be released once GMX trades above $90, and only proportionally to stakers who have maintained at least 80% of their peak staked balance throughout the waiting period.
Any breach of that threshold condition will result in forfeiture of all accumulated rewards with no exceptions. Also, a one-week buy-wall of 1 million GMX will be placed at $5 on on-chain exchanges to absorb any concentrated selling overhang.
Others join GMX in questioning buybacks
The reckoning at GMX is part of a wider disillusionment with open-market repurchases as a tokenomics tool. Across the industry, protocols spent more than $1.4 billion buying back their own tokens between January 1 and October 15, 2025, according to CoinGecko data.
Despite these efforts, prices for many of those tokens continued to fall. Jupiter, the leading decentralized exchange aggregator on Solana, spent over $70 million on JUP token repurchases across the year, roughly half its total protocol fee revenue.
The effort proved insufficient against $1.2 billion in scheduled token unlocks. Today, JUP has fallen by over 90% from its peak, and in January 2026, co-founder Siong Ong opened a public debate about halting the program entirely.
Siong asked on X, “what do you all think if we stop the JUP buyback?”
He also answered the same question in the same post, stating, “We spent more than 70m on buyback last year, and the price obviously didn’t move much. We can use the 70m to give out for growth incentives for existing and new users.”
Are there models that actually work?
Hyperliquid is most often cited as the counterexample when it comes to buybacks. The derivatives exchange deployed over $644 million in HYPE token repurchases in 2025, accounting for over 46% of all token buyback spending across the industry, and the funds came from trading fees that exceeded $100 million in August 2025 alone.
In December 2025, the Hyper Foundation proposed burning approximately $920 million worth of HYPE held in its Assistance Fund, making the supply reduction permanent. HYPE is up by 0.81% in the past 30 days, while Bitcoin and Ethereum are both down more than 5.7% and 6.8%, respectively, over the same period.
Hyperliquid’s buybacks are funded from surplus trading revenue, automated, and result in permanent supply destruction. Jupiter’s were funded by diverting operating revenue and manually executed, and the tokens were locked rather than burned, meaning they could eventually return to circulation.
GMX’s new approach attempts to bridge the gap via treasury accumulation, as with Hyperliquid, combined with a hard lock-up and price-triggered distribution mechanism designed to reward only long-term holders. It’s not fully possible to gauge the success of the new strategy, as it just got off the ground.