Hyper Foundation Proposes Burning $1 Billion Worth of HYPE Tokens

TLDR

• Hyper Foundation proposes burning $1B in HYPE tokens through a vote by validators.

• Tokens in the Assistance Fund are currently irretrievable without a hard fork.

• Most validators plan to vote “Yes” to remove the HYPE tokens from circulating supply.

• A major $11M liquidation on Hyperliquid took place amid market volatility.

The Hyper Foundation has put forward a proposal that could remove nearly $1 billion worth of HYPE tokens from circulation. On December 17, the foundation posted a message on Discord asking for a vote on whether to consider HYPE tokens held in the Assistance Fund as “burned.” The vote is set to remain open until December 21, 2025.

The proposal revolves around a system where a portion of trading fees from the blockchain are converted into HYPE tokens. These tokens are stored in an Assistance Fund, which is designed to function as a continuous buyback-and-burn mechanism. Importantly, the fund is structured in a way that the tokens within it are irretrievable without a hard fork, making them mathematically impossible to recover.

This move is intended to deflate the circulating supply of HYPE tokens, which could potentially benefit the token’s value by reducing the total available supply. As of now, around 37 million HYPE tokens are stored in the Assistance Fund, representing more than 13% of the circulating supply.

Hyper Foundation Token Burn Proposal and Validator Vote

The Hyper Foundation’s proposal involves treating the tokens in the Assistance Fund as “burned,” which would effectively remove them from both the circulating and total supply of HYPE tokens.

The foundation has noted that no on-chain action is required, as the tokens are already stored in an address with no private key. The vote is a binding social consensus to never allow any protocol upgrades to access this address.

Most validators within the community have indicated their intention to vote “Yes” on the proposal. If approved, this would remove the 37 million tokens from the total supply, reducing the available amount of HYPE in circulation. This decision could also lead to a deflationary effect, putting upward pressure on the token’s value. However, the final result will depend on the outcome of the vote, which is based on stake-weighted consensus.

Liquidation Event Amidst Market Volatility

Amid this proposal, the broader market for cryptocurrencies has been facing high volatility. A major liquidation event recently took place on the Hyperliquid platform, where $11 million worth of HYPE-USD positions were liquidated. This was part of a broader downturn that saw $526 million liquidated across crypto markets in just 24 hours.

The liquidation event highlights the challenges faced by traders as the market continues to react to factors such as potential interest rate hikes and global economic uncertainty. Bitcoin’s price saw brief volatility, with a rally to $90,000 before settling at around $85,000, further fueling the liquidation wave.

The $11 million liquidation on Hyperliquid was one of the largest individual orders during the downturn. It also underscores the fragility of the crypto market, as large liquidations can cause sharp price movements that impact both small and large holders.

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