The ASTER token dropped more than 12% on Monday, reaching a record low of $0.61. In response to this significant price decline, the Aster protocol has activated its fee-driven buyback program. This program allocates up to 40% of the platform's daily revenue towards automatic repurchases of the ASTER token.
Buyback Activation Details
As of Monday morning during the Asian session, the ASTER token was trading at $0.63.
Aster officially announced the deployment of capital from its Strategic Buyback Reserve for ASTER token repurchases. These buybacks are executed automatically via a dedicated wallet. This activation aligns with the protocol's Stage 5 Buyback Program, which was initially unveiled in late December.
In a statement, Aster shared, "We're now actively deploying our Strategic Buyback Reserve for ASTER token repurchases automatically. This activation allocates 20-40% of daily platform fees into targeted buybacks, responding dynamically to market conditions to maximize value and reduce circulating supply."
The protocol has structured its buyback mechanism with a dual approach, combining predictable actions with strategic flexibility.
The automatic daily buybacks are designed to consume 40% of the daily platform fees. These repurchases are executed each day through a specific, dedicated wallet. Concurrently, the Strategic Buyback Reserve is designated to hold between 20% and 40% of the daily fees. This reserve is intended for more targeted purchases, with decisions based on prevailing market conditions.
Market Pressure and Implications
The recent decline in ASTER's price occurs within a broader context of market pressure affecting smaller Decentralized Exchange (DEX) tokens.
Notably, the Lighter DEX protocol recently implemented a comparable buyback strategy for its LIT token. Following that announcement, the LIT token experienced a rally of nearly 20%.
The continued slide of ASTER, even with the intervention of the buyback program, suggests that protocol-driven buybacks might encounter limitations, particularly in bearish market conditions or within markets characterized by thin liquidity.