The Hyperliquid Foundation has proposed classifying roughly $1.02B in HYPE as permanently inaccessible, targeting the protocol’s Assistance Fund and removing 37.114 million HYPE — about 13.7% of total supply — from effective circulation. The governance move seeks a deflationary supply outcome that supporters say will restore confidence and clarify supply metrics through a formal validator commitment.
The proposal, requests validators to recognize all HYPE tokens held in the Assistance Fund’s system address as permanently inaccessible and to commit not to approve any future changes that would unlock those tokens.
The Assistance Fund automates the conversion of 93–99% of protocol trading fees into HYPE via the protocol’s Layer‑1 execution layer; those tokens accumulate in a public system address without a private key. The proposal notes no on‑chain “burn” transaction is required because the address functions effectively as a burn address; technically, only a protocol‑level intervention such as a hard fork could restore access.
The proposal centers on the Assistance Fund’s accumulated HYPE and the rules governing its inaccessibility, positioning the vote as a mechanism to lock in scarcity while standardizing how supply is reported across the ecosystem.
Decision authority rests with a stake‑weighted validator process: validators were required to signal their intent on the governance forum by 2025-12-21 04:00 UTC, and token holders can delegate stake to aligned validators until 2025-12-24 04:00 UTC, when the final outcome will be determined.
Hyperliquid governance vote: mechanics and timeline
If adopted, the measure would reduce HYPE’s effective supply by the specified 37.114M tokens, a structural change intended to produce greater scarcity and a more predictable supply profile. Supporters frame this as a deflationary shift designed to improve market sentiment and price discovery following recent downward pressure. The proposal also seeks to exclude the Assistance Fund balance from circulating and total supply calculations to standardize reporting.
The change carries trade‑offs. Permanently sidelining the funds removes a discretionary resource that could otherwise fund grants, development, or emergency interventions, constraining future treasury flexibility. The governance pledge from validators to never approve upgrades unlocking those tokens substitutes a procedural lock for operational flexibility, raising practical questions for product teams and compliance functions that rely on treasury access for contingency planning.
From a governance perspective, the vote formalizes a social consensus rather than effecting a cryptographic destruction; the procedure depends on validators’ long‑term adherence. For institutional actors tracking tokenomics and NAV, the proposal aims to reduce ambiguity in supply figures and signal commitment to a stricter token policy.
