Hyperliquid Proposes Burning $1B in HYPE to Make Supply Deflationary

The Hyperliquid Foundation proposes irrevocably classifying approximately 37 million HYPE shares, with a market value of around $1 billion, as “burned.” Strategic considerations lie behind this.

Hyperliquid (HYPE) wrote its own unique story in the crypto year 2025; from May to September, the altcoin was practically in constant rally mode. But after HYPE reached an all-time high of nearly $60 in mid-September, the party ended, and with prices around $24, Hyperliquid is now back at levels last seen on New Year’s Day. This may also be one reason for the Hyperliquid Foundation‘s proposal, published on X, to significantly modify its tokenomics.

HYPE shares from the Hyperliquid buyback program are to be deleted

Specifically, the proposal put to a vote is to define all HYPE tokens accumulated in the so-called “Assistance Fund” as “burned.” According to blockchain data, this currently amounts to approximately 37 million HYPE tokens, whose value at today’s prices is close to $1 billion. This represents roughly 11 percent of all HYPE tokens officially in circulation. So what motivates the Hyperliquid Foundation to make such a significant intervention in the token distribution?

All HYPE (hyperactive cryptocurrency) earmarked for destruction through a buyback program, generated from Hyperliquid’s fee revenue, are automatically deposited into the “Assistance Fund” account. According to the foundation, there is no private key for this system address, and no one has access.

However, the HYPE stored there are still formally counted as part of Hyperliquid’s circulating supply. With its proposal, the foundation aims to secure a legally binding commitment from Hyperliquid not to make any future protocol changes that would allow access to the HYPE in question.

Deadline December 24th for the Hyperliquid referendum on HYPE

Hyperliquid validators are to submit their feedback by December 21st, and the referendum is scheduled to end on December 24th.

If the proposal receives a majority, the number of HYPE tokens reported as “in circulation” would decrease from the current 336 million tokens to approximately 300 million. This would also result in a reduction of Hyperliquid’s current market capitalization from approximately $8 billion to around $7 billion.

Conclusion: Hyperliquid Plan for HYPE – a gimmick or long overdue?

The Hyperliquid buyback program is a cornerstone of HYPE ‘s success , with over 90 percent of the fee revenue from the decentralized cryptocurrency exchange allocated to it. The concept also implies deflation, as the number of circulating HYPE is intended to decrease. However, this isn’t currently reflected in Hyperliquid’s statistics because the affected HYPE are still officially listed as existing. The Hyperliquid Foundation aims to change this, suggesting that HYPE would be displayed with a reduced circulating supply in data services, thus making the altcoin deflationary, which often proves to be a price driver.

Let’s do the math: According to official documentation, HYPE staking for rewards adds almost 2.4 percent more tokens to the circulation annually. This year, the results of the buyback program affect approximately 11 percent of all Hyperliquid coins. If the foundation’s proposal is approved, measurable deflation would indeed occur. Whether this would then give HYPE’s price a positive boost is another question – because the plan essentially just irrevocably incorporates an already established practice in Hyperliquid tokenomics into the statistics.

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(Featured image by rebceter moscow via Pixabay)

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