ETHFI Buybacks Miss Guidance as Token Circulating Supply Rises Instead of Falling?
Written by: Carlos
Translated by: AididiaoJP, Foresight News
During the August 13 Analyst Hours call, I explained why I remain bullish on ETHFI. It had just been sold off due to the Ethereum staking proposal, and the market was valuing EtherFi solely as a staking company while overlooking EtherFi Cash: this crypto payment card business already contributes 65% of EtherFi's revenue, with card spending reaching $100 million in July, and systematic buybacks have linked this growth directly to the token. The market has also underestimated Cash's progress—the payment card drives customer acquisition, while borrowing and trading functions deepen monetization.
Buyback funding falls short of guidance and does not scale with EtherFi Cash spending
Since the week of September 7, EtherFi Labs has transferred $1.48 million to the Foundation for buybacks, including yesterday's $225,000. This marks three consecutive weeks maintaining the same amount.
As of October 18, the Foundation purchased 1.81 million ETHFI at an average price of $0.692. Based on $225,000 per week, buyback funding amounts to approximately $975,000 per month, roughly 27% below the $1.33 million guidance.
The fixed weekly amount of $225,000 has raised questions. The proposal originally stated that buybacks would scale alongside Cash spending. Yet over the past eight weeks, weekly Cash spending rose from $27.6 million to $31 million, while buyback funding remained completely flat. If it is truly tied, increased spending should drive proportional buybacks, or at least not leave them stagnant.
This is not a typical buyback: most repurchased tokens flow back into the market
Most token buybacks follow one of two models. One is buy-to-burn, such as with PUMP or UNI, where tokens are permanently removed from supply. The other is buy-and-hold, like Hyperliquid's Assistance Fund, which does not burn tokens but still removes them from circulation. Both models reduce circulating supply.
EtherFi's approach differs. The proposal stated that half of the purchased ETHFI would stay in the Foundation treasury and half would be distributed via cash-back rewards. However, according to the team's dashboard, nearly all bought tokens flowed into cash-back distributions.
Over the past six weeks, EtherFi's distribution contract paid out 1.83 million ETHFI, nearly matching the total purchased volume. Recipients subsequently moved 1.28 million of those, roughly 70%, out of their Cash accounts, leaving only 548,000 inside.
As a result, users converting ETHFI back into US dollars offset a significant portion of the buyback pressure. Cumulatively, purchase volume still exceeds outflows by 42%; however, the weekly advantage has disappeared. During the week of October 12, outflows exceeded buybacks by 7%, marking the first time net flow turned negative.
EtherFi's buyback resembles a customer acquisition cost paid in ETHFI rather than a supply-reduction mechanism. That isn't inherently bad, but it cannot be directly compared to the buybacks of PUMP, UNI, or HYPE—where tokens are outright removed from circulation.
The positive side is that rewards are funded by revenue rather than inflation, with receiving accounts growing from roughly 3,800 at the end of September to 6,820. Still, this program will not drive revaluation through circulating supply reduction like a burn mechanism would.
Two things to watch next
First, whether buyback funding can catch up to guidance, or if the team will clearly disclose how much of their spending goes toward ETHFI buybacks. At $225,000 weekly with rising spend and flat buybacks, it remains unclear how the plan aligns with the original proposal description.
Second, whether lending revenue will be added to buybacks. The trigger requires Cash loans on EtherFi's Aave V4 instance to reach $50 million. Current loans stand at $42.1 million, up 78% since mid-August, while lending revenue remains minimal at approximately $31,000 per week.
EtherFi's new banking operations continue to grow. In my view, ETHFI remains the best way to gain exposure to the on-chain banking thesis. While the buybacks do not remove tokens from circulation, the design is interesting: it rewards users while funding growth, all paid for by revenue rather than new issuance.