The Hyper Foundation has initiated a pivotal governance proposal that could permanently remove all HYPE tokens held in its Hyperliquid Assistance Fund from circulation. The proposal calls for a validator vote to treat the approximately 37 million HYPE tokens—representing over 10% of the circulating supply—as permanently burned.
The tokens are already locked in a system address with no private key, making them mathematically irretrievable without a protocol-level intervention. The Foundation emphasizes that no on-chain technical action is required; the vote seeks to establish a binding social consensus that the protocol will never authorize an upgrade to access these funds. This would formally exclude the tokens from both circulating and total supply calculations.
The governance process involves a stake-weighted validator vote. Validators must signal their intent on the governance forum by December 21 at 04:00 UTC. Token holders can then delegate their staked tokens to validators aligned with their position until the final deadline on December 24 at 04:00 UTC, when the outcome will be determined based on the total weight of staked tokens.
If approved, this move would lock in a more restrictive supply model by preventing any future use of the Assistance Fund balance for grants, development, or emergency measures. The Assistance Fund automatically converts a portion of the protocol's trading fees into HYPE through an embedded process in Hyperliquid's Layer 1 execution layer. Hyperliquid has been a top on-chain perpetuals venue by volume and fee revenue in 2025.
The vote follows earlier community discussions in 2025 about supply reductions, including a September proposal for a 45% total supply cut that did not advance. This current proposal represents a defining moment for the project's tokenomics and long-term strategic direction.
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