The Hyper Foundation officially announced that the governance vote has passed, formally recognizing all HYPE tokens held in the Assistance Fund as permanently burned.
The vote was stake-weighted: 85% in favor, 7% against, and 8% abstaining. This removes approximately 37–37.5 million HYPE tokens worth around $900 million to $1 billion at recent prices from both circulating and total supply metrics.
The tokens were accumulated automatically from protocol trading fees and were already inaccessible no private key exists, making them irretrievable without a hard fork. The “burn” is a social/governance consensus: validators committed to never approving any protocol upgrade to access the funds, plus future fee inflows will continue to this address.
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This move enhances supply transparency, eliminates perceived overhang risks, and reinforces Hyperliquid’s deflationary tokenomics, as ongoing fees now effectively act as continuous burns.
Despite the positive development, HYPE’s price saw a slight dip shortly after the announcement around -2-3% to ~$23-24, likely due to broader market conditions or profit-taking. This follows their initial proposal on December 17, 2025, which received strong community and validator support leading into the vote deadline.
The formal recognition of ~37-37.5 million HYPE tokens valued at ~$900M-$1B as permanently burned marks a significant shift in Hyperliquid’s tokenomics. Reduces both circulating and total supply by ~13%, eliminating any perceived future overhang from the Assistance Fund.
Ongoing trading fees will continue routing to the inaccessible address, effectively turning all future fee inflows into permanent burns. This creates a truly continuous deflationary pressure tied directly to protocol revenue and volume.
Net effect: Strengthens HYPE’s value accrual model, where higher trading activity directly benefits holders through reduced supply similar to Ethereum’s EIP-1559 but more aggressive, as ~97-99% of fees historically fuel buybacks/burns.
Aligns reported supply metrics on CoinGecko, CoinMarketCap with on-chain reality—the tokens were already irretrievable, but now they’re officially excluded. Removes ambiguity that previously led to mispricing of circulating market cap and fully diluted valuation (FDV).
Analysts note this corrects “lazy” metrics, potentially leading to revaluation upward as investors recalibrate. Signals strong governance credibility: 85% stake-weighted approval demonstrates community/validator alignment on long-term holder value over short-term flexibility.
HYPE dipped slightly post-announcement— 2-3%, trading around $23-24, likely due to broader market weakness, profit-taking, or ongoing token unlock pressures. Long-term bullish catalyst: Reduces selling pressure, boosts scarcity narrative, and could attract deflationary-asset seekers. If volume sustains, projected annual burns could outpace emissions/inflation significantly.
Ongoing monthly unlocks ~$200M+ recently and competition in perps DEX space may cap upside unless revenue grows 2-3x to fully offset dilution. Permanently forgoes a ~$1B reserve that could have funded grants, ecosystem development, insurance backstops, or emergency interventions.
Hyperliquid now relies purely on organic product strength leading perps volume, no-gas L1 and cash flow for growth—no “war chest” fallback. Some community concern: Increases vulnerability if volume drops sharply, though current dominance mitigates this.
It’s reinforces Hyperliquid’s commitment to decentralized, holder-aligned decisions via stake-weighted voting bypassing traditional on-chain limits. Sets a model for other protocols: Binding social consensus to treat inaccessible funds as burned, enhancing trust without code changes.
Positive for DeFi narrative in 2025—amid competition and unlocks, this prioritizes sustainable tokenomics over incentive farming. This is widely viewed as a net positive for long-term HYPE holders, cementing deflationary credibility at the cost of flexibility.
It addresses key criticisms while Hyperliquid maintains perps leadership, but success hinges on sustained or growing trading volume to maximize ongoing burns.