Hyperliquid Governance Vote Could Cut HYPE Supply 45%: Decision Looms

TLDR:

• Hyperliquid proposal seeks to burn 452M+ HYPE from treasury and revoke future reward authorization.
• Max supply cap of 1B HYPE would be removed, allowing governance to approve new issuance later.
• Authors argue pre-allocated supply distorts valuation metrics and turns away potential investors.
• Proposal does not dilute holders and could lead to better token price discovery over time.

Hyperliquid could soon see a major shift in its token economy. Asset managers Jon Charbonneau and Hasu have proposed slashing HYPE’s total supply by more than 45%. 

The plan calls for burning large allocations held in treasury and revoking authorization for unminted rewards. It also seeks to remove the token’s long-standing 1 billion max cap, allowing new issuance if approved later. 

The proposal is now open for discussion and review by the community.

Proposal to Burn Treasury HYPE

The authors explained that Hyperliquid currently holds a large reserve of authorized but unused HYPE. This includes roughly 31 million tokens in its Assistance Fund and more than 421 million tokens set aside for future emissions and community rewards.

Under the proposal, all tokens in the Assistance Fund would be permanently burned. Any future buybacks sent to that fund would also be destroyed. The plan also revokes authorization for the unminted community reward allocation, effectively removing it from future supply.

Charbonneau said the changes would align Hyperliquid’s accounting with its strategy. He added that this could allow investors to assess the protocol more accurately.

He and Hasu argue that pre-allocated but unused tokens distort valuation metrics and deter capital inflows.

Max Supply Removal and Market Impact

Another key part of the proposal is removing HYPE’s max supply cap of 1 billion tokens. 

Future issuance, such as for staking emissions, would instead increase total supply over time. The authors noted that other major crypto assets like ETH and SOL operate without fixed supply caps.

They argued that removing the cap would not affect existing holders’ ownership share. 

Instead, it would simply reflect reality and allow governance to approve new issuance only when value-accretive. This could mean fewer tokens would need to be distributed in incentive programs if the price rises.

The post, cross-shared on DBA and credited to Comfy Capital and Felipe Montealegre for review, stated that the market often penalizes projects with high authorized supply. The team believes cutting supply now could support better pricing dynamics and attract new participants.

Community discussions on the proposal are ongoing, with no timeline yet announced for a vote.

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