Why did PONS's buyback engine fail? A textbook case of a "fee buyback" model
Last month, PONS was still called "the most profitable money printer on Robinhood Chain."
Daily revenue was close to $2 million, with daily buybacks exceeding $1 million. Uniswap Labs personally invested, and the token's market cap surged from $35 million to $500 million in a week and a half, reaching an all-time high of $0.97. Early buyers turned $2,600 into $1.2 million.
At that time, everyone thought PONS had found the perfect solution for Meme coins—using real cash income to buy back and burn tokens, turning speculative assets into cash flow assets.
One month later.
PONS's market cap dropped to $414 million, down more than 58% from the peak of $990 million. Daily revenue fell from nearly $2 million to about $240,000, a decline of about 88%. Daily buybacks plummeted from over $1 million to less than $200,000.
This is not an ordinary correction.
This is a "buyback engine" stalling in broad daylight.
How exactly does PONS's buyback engine work?
Pons is a Meme coin issuance platform on Robinhood Chain. Users issue tokens and trade on the platform, generating fees. The fee distribution path is:
Trading fees → Creators get 70%, protocol gets 30% → 80% of protocol income is used to buy back and burn PONS, 20% for operations.
As of early September, PONS had burned about 29% of the initial supply.
This logic sounds flawless:
The more active the platform → the more fees → the more buybacks → the less circulating supply → the higher the price → attracting more participants → the platform becomes more active.
A perfect positive flywheel.
But the premise of the flywheel is "the more active the platform."
The fatal turning point: activity is not constant, it is variable
Data shows that from September 29 to October 2, Pons V2's daily token issuance averaged 6,768, down about 72% from early September. Daily fees dropped from $6.87 million to $1.48 million, a decline of about 78%.
Token issuance plummeted 72%, fees dropped 78%.
Buyback funds shrank by nearly 90%. Daily buybacks fell from over $1 million to less than $200,000.
What’s more painful is this created a "death spiral" feedback loop:
On-chain speculative activity cools → token issuance and trading volume decline → fee income crashes → buyback scale collapses → price loses support and continues to fall → profit-making effect disappears → participants exit further → activity cools further.
Each link feeds the next. The colder it gets, the more it falls; the more it falls, the colder it gets.
PONS founder Ozzy admitted in response to community doubts on October 3: the buyback rate "has not yet been adjusted," and the previous "claim" step "has not been fully decentralized," with about $440,000 accumulated in the custody account waiting to be claimed for over 5 days without transfer.
In plain language: even the buyback execution itself broke down.
Why is Uniswap's "buyback" more stable than PONS's?
Many compare PONS and Uniswap because both do "protocol income → token buyback."
But their tokenomics underlying logic is completely different.
PONS's model:
Protocol income → 80% used for buyback and burn → reduce circulating supply → support price.
Value capture fully depends on the amount of buyback funds. Buyback funds = fees × 80%. Fees = token issuance × trading volume × rate.
Token issuance is a derivative of the Meme market. When Meme hype fades, everything goes to zero.
Uniswap's model:
Fee switch directs about 17% of swap fees to protocol income, used to buy back and burn UNI, reducing annual supply by about 0.4%. UNI's current daily income is about $129,000, with 30-day income about $4.9 million.
But the key difference is: UNI's value does not rely on buybacks to "support" it.
UNI is a governance token; holders have voting rights on the protocol fee switch and treasury governance. Buyback and burn is a value accumulation bonus, not the sole pillar of price support.
PONS treats buybacks as the engine. Uniswap treats buybacks as turbocharging.
If the engine stalls, the car stops. If the turbo breaks, the car can still run.
This is not just PONS's problem; it's a common issue with the entire model
By 2026, over 100 crypto projects shut down or went bankrupt, with most altcoins retreating 70% to 90% from their highs.
Cases of buyback failure are numerous:
Jupiter: spent over $70 million on buybacks in 2025, JUP fell about 76.7% for the year. Co-founder SIONG publicly reflected: "Buybacks didn't work; maybe we should spend money on user growth?"
Pump.fun: $330 million annual revenue, spent $315 million on buybacks, token dropped 60% after launch.
Helium: founder directly announced stopping HNT buybacks, citing "market almost no reaction to project buybacks."
A tracking of 159 token buyback projects shows: excluding the outlier Hyperliquid, buyback and burn tokens averaged a 56% decline.
One token determines the fate of the entire category.
The rest are all losing money.
PONS's problem is not that the "buyback mechanism is broken."
The buyback mechanism was never "good."
This model's premise is continuous growth in fee income. But Meme market activity is cyclical, sentiment-driven, and unpredictable.
You are using an unpredictable variable to support a mechanism that requires certainty.
It's like building a foundation with sand on the beach. It looks beautiful at high tide, but at low tide, nothing is left.
PONS's lesson is worth remembering for all Meme projects relying on "income buybacks":
When your token price is built on protocol income, you are no longer a Meme—you are a cash flow asset without a moat.
$PONS$HOOD$AI
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