Hyperliquid Governance Vote: Formalizing $1 Billion HYPE in Assistance Fund as Burned Supply

Source: CoinTribune Original Title: Hyperliquid Pushes For Greater Transparency On Tokenomics Original Link: https://www.cointribune.com/en/hyperliquid-pushes-for-greater-transparency-on-tokenomics/

Overview

Hyperliquid’s Hyper Foundation has submitted a governance proposal to validators to formally recognize 37 million HYPE tokens accumulated in its assistance fund as permanently excluded from circulating supply metrics. This vote aims to clarify the protocol’s tokenomics and enhance transparency, potentially removing nearly $1 billion from official supply calculations.

The Assistance Fund Vote

The proposal calls for validators to formally recognize that HYPE tokens stored in the assistance fund are “definitely inaccessible” and should be considered “burned.” The system address managing this fund is not associated with any private key or control mechanism, making the funds irreversibly locked except through a hard fork—a scenario the foundation seeks to prevent.

Currently, this wallet contains approximately $1 billion worth of HYPE, generated through an automatic mechanism that converts trading fees on the network into tokens sent to this locked address. The vote aims not to technically reduce supply through an active burn mechanism, but rather to clarify how these tokens should be accounted for in the protocol’s official metrics.

Key Mechanisms of the Assistance Fund

• Integrated into the execution layer of the Hyperliquid blockchain
• Automatically funded by trading fees converted into HYPE
• The address has no private key or administrative access, making funds technically inaccessible
• Currently holds approximately $1 billion worth of HYPE
• Formalization aims to permanently exclude these tokens from circulating and total supply calculations

Economic Implications and Market Strategy

The economic implications of this proposal extend beyond simple accounting clarification. According to Native Markets, issuer of the native USDH stablecoin, 50% of stablecoin reserve yield is directed toward the assistance fund and converted into HYPE. If validated, these amounts will also be formally considered “burned.”

This dynamic reinforces a continuous reduction in effective supply without requiring an active burn mechanism—a strategy that attracts institutional interest. Cantor Fitzgerald’s analysis estimates that 99% of protocol fees are already redirected to this fund, contributing to a gradual decrease in HYPE’s circulating supply.

Market Position and Governance Significance

Two major entities hold significant HYPE allocations: Hyperion DeFi (HYPD) with approximately $46 million, and Hyperliquid Strategies (PURR) with nearly $340 million in holdings. DefiLlama ranks Hyperliquid as the third-largest perpetual products DEX, with $205 billion in volume over the past 30 days.

This governance vote demonstrates how DeFi protocols reconcile accounting rigor with community governance. By formalizing the status of inaccessible funds, Hyperliquid establishes a precedent that could influence other protocols managing dormant liabilities or opaque mechanisms, emphasizing the importance of clear governance for potential institutional partners.