Top 3 DeFi Protocol Ether.fi’s Token Doubles After Boosting Buybacks

A week after implementing plans to significantly expand the amount of tokens it buys back and distributes to stakers, Ether.fi’s ETHFI token has almost doubled in value.

On May 9, Ether.fi posted on X that it spent 137 ETH ($320,000) to buy back 437,000 ETHFI tokens. More than half of that, about 70 ETH, came from exit fees, which were newly added to the buyback pot.

Since September 2024, Ether.fi has been using a portion of the protocol’s revenue to buy back ETHFI tokens and reward them to stakers, Ether.fi founder and CEO Mike Silagadze told The Defiant via email. Since then, it has returned “a few million” dollars worth of ETHFI to stakers, he added.

ETHFI surged from $0.70 on May 9 to $1.44 on May 13, before falling back slightly to $1.30, still an 86% increase, according to The Defiant’s price charts.

“The buybacks are pretty simple,” Silagadze said. “We take a share of protocol revenue (which ranges between 5% and 25% monthly) and exit fees revenue, and use that to buy ETHFI on the market. Then that ETHFI is deposited into the ETHFI staking pool so that it accrues to stakers. Last week this was around 137 ETH, this week it's about 100 ETH.”

Ether.fi is the fourth-largest decentralized finance (DeFi) platform, with $7 billion in total value locked (TVL), according to DeFiLlama.

Investors Eye Fundamentals

Ether.fi’s decision to boost buybacks won praise from BitMEX co-founder Arthur Hayes, who posted on X about the plan, saying “$ETHFI = the Amex of #crypto.”

“It’s fundamental szn bitches,” Hayes said. “F@#% your no client, no revenue shitcoins. Give me that cash money in the form of buyback and burn.”

The fundamentals szn (season) narrative has been catching on, Silagadze said. “People are tired of the same gambly bullshit, they want to see tokens with real utility and a connection to the success of their protocols, rather than just meme coins with the same name as the project. I really think there's a general vibe shift towards fundamentals happening.”

As for the impact of Hayes’ post on ETHFI’s price, Silagadze said single posts rarely move the needle, but noted that Hayes has almost 700,000 followers.

“Arthur has a big audience, and he's been an amazing supporter, so I'm sure it helped,” he said.

DeFi Bank

In late April, Ether.fi launched a non-custodial banking alternative, calling it the first “defibank.”

The goal is to allow crypto users to conduct their day-to-day finances without the need for a traditional bank. Along with staking and liquid strategy vaults, there is a DeFi-native physical Visa credit card offering 2%-3% cashback.

“The end state of what we're looking for is creating a new financial infrastructure for people to be able to get their salary in crypto, deposit it into Ether.fi, save their money and be able to spend their money, meaning pay their mortgage, pay their car, pay their utilities,” Silagadze told The Defiant last month.