How Can a Token Buyback and Burn Mechanism Create Value for Governance Token Holders?

A buyback and burn mechanism uses a portion of the protocol's revenue (fees) to purchase the governance token from the open market and then permanently remove (burn) it from the total supply. This action creates value by reducing the circulating supply, which is deflationary, and by demonstrating a direct link between protocol revenue and token value.

It signals to investors that the protocol is actively managing its tokenomics to increase scarcity.