Hyper Foundation puts permanent Assistance Fund HYPE burn to validator vote

The Hyper Foundation announced on December 17 that it is conducting a validator vote to acknowledge the Assistance Fund HYPE coins as irreversibly burned, legally. The burn of the Assistance Fund HYPE would strengthen community consensus and transparency by eliminating the tokens from both circulation and total supply.

The proposal requests that validators acknowledge that, even in the absence of an on-chain transaction, the Hyperliquid tokens accrued in the Assistance Fund are permanently burned. The tokens cannot be accessed since they are already located in a system address that has never been controlled by a private key, without a protocol-level intervention.

Hyper Foundation proposes governance vote on Assistance Fund

Factually, the Assistance Fund fully automates the conversion of trading costs to HYPE as part of the L1 execution. The Assistance Fund uses the system address 0xfefefefefefefefefefefefefefefefefefefefefefe. The Assistance Fund system address has never had a private key with control over its funds, much as the zero address.

Hyper Foundation proposed that a “Yes” vote would create a legally binding societal agreement that the protocol would never permit an update to access such funds. According to the Foundation, since the tokens are already mathematically irretrievable, no technical modifications are needed.

According to community estimates, the Assistance Fund’s balance is approximately 37 million HYPE, or more than 10% of the total supply in circulation. The tokens would not be included in the total supply calculations if they were formally deleted.

Hyper Foundation stated that a stake-weighted validator procedure will be used to make the decision. The decentralized blockchain platform emphasized that validators must indicate their intention on the governance forum by December 21 at 04:00 UTC. After that, token holders can assign stakes to validators who share their viewpoint until December 24 at 4:00 UTC, at which point the outcome will be decided.

If adopted, the change would limit future use of the Assistance Fund balance for grants, development, or emergency measures, thereby locking in a more constrained supply model. According to the Foundation, the outcome of the vote will decide whether the Assistance Fund balance is permanently removed from supply calculations.

Hyperliquid supply reduction proposal impacts HYPE dynamics

The vote comes after previous community talks regarding 2025 supply cuts, such as a September plan that proposed a 45% reduction in overall supply but was unsuccessful.

On September 22, researcher Hasu and co-founder of DBA investment business Jon Charbonneau filed a proposal that would change Hyperliquid’s tokenomics. According to the proposal, authorization for approximately 421 million tokens in the Future Emissions & Community Rewards pool would be revoked. 

The proposal revealed that approximately 31 million HYPE held in the Assistance Fund would be burned. The burning of about 31 million HYPE and authorization for roughly 421 million tokens would reduce the approved total supply from 1 billion to roughly 550 million HYPE, a reduction of more than 45%.

Additionally, HYPE’s $1 billion hard cap would be lifted, enabling future issuance only via channels authorized by governance, including staking emissions or community awards. Crucially, approximately 45 million tokens in circulation would not change, meaning current holders would not face dilution.

Notably, in 2025, Hyperliquid ranked as the leading on-chain perpetuals venue by volume and fee revenue. A large portion of those fees has continued to flow into the Assistance Fund through the automated conversion process of the protocol.

The evolution of HYPE supply dynamics over time has been largely dependent on that mechanism. On September 18, HYPE hit an all-time high of $59.29, up more than 40% for the month, solidifying its position as the preferred platform for trading decentralized derivatives.

On-chain data reveal that as of December 17, the price of Hyperliquid (HYPE) is $26.98. The price has changed by 1.6% in the last day and 1.1% in the last hour. In terms of longer-term performance, the price has fluctuated by 30.6% down over the previous month and by 6.7% down during the last seven days.

Join Bybit now and claim a $50 bonus in minutes