In a decisive move for its tokenomics, the Hyper Foundation has initiated a high-stakes governance vote that could formally remove approximately $1 billion worth of its native HYPE token from circulation. The proposal seeks to have network validators recognize the 37 million HYPE held in the protocol’s “Assistance Fund” as permanently burned, a reclassification that would reduce the circulating supply by over 10%.
Formalizing an Irreversible State
This is not a traditional token burn that requires an on-chain transaction. Instead, the vote aims to establish a binding “social consensus” among validators. The tokens in question have already been accumulating for years in a publicly known system address that was created without a private key, making them mathematically irretrievable under the current protocol rules. A “Yes” vote is a pledge that validators will never authorize a future protocol upgrade to access these funds, thereby permanently sidelining them from both circulating and total supply calculations.
A Vote for Clarity and Scarcity
The Hyper Foundation frames the vote as a crucial step toward supply transparency and long-term scarcity. The Assistance Fund is central to Hyperliquid’s economic model, automatically converting a large share of the platform’s trading fees into HYPE. With Hyperliquid established as a top venue for on-chain perpetual trading, this flow has created a significant overhang of tokens that, while inaccessible, were still counted in total supply figures. Removing this overhang is designed to improve investor confidence and provide clearer data for institutional valuation models.
The governance process is stake-weighted and follows a clear timeline. Validators must signal their voting intent by December 21, 2025, at 04:00 UTC. Following this, HYPE token holders have until December 24 at 04:00 UTC to delegate their stakes to validators aligned with their position, with the final outcome determined at that deadline.
Context and Implications for the Ecosystem
This focused vote follows a more ambitious but unsuccessful proposal from September 2025 that aimed to reduce Hyperliquid’s total authorized supply by 45%. The current measure is narrower, dealing solely with the existing Assistance Fund balance. If passed, it would lock in a more restrictive supply model by preventing these tokens from ever being used for grants, development, or emergency measures, reinforcing a deflationary narrative for the asset.
The outcome of this vote represents a defining moment for Hyperliquid, moving beyond technical execution to cement an economic principle through community governance. By converting a technical reality into a formalized social consensus, the protocol seeks to strengthen its foundation for future growth and institutional engagement.
