Hyperliquid Proposes Major Supply Reduction for HYPE Token
The Hyperliquid community is preparing for significant changes to the HYPE token economy. The goal is to reduce the total supply by over 45%. The proposal is co-authored by crypto experts Jon Charbonneau and Hasu. It aims to cancel unminted allocations, burn inactive reserves, and cut excess token supply.
This plan targets non-outstanding tokens that distort valuation metrics. It seeks to provide clearer insights for investors before upcoming token unlocks.
Details of the Supply Reduction Proposal
HYPE currently has a total supply of 1 billion tokens. About 333.92 million tokens are in circulation. Over 547 million tokens remain locked in Future Emissions & Community Rewards (FECR) and the Assistance Fund (AF).
- The proposal cancels more than 421 million unminted FECR tokens.
- It burns 31.3 million AF tokens.
- It removes the 1 billion token supply cap.
These changes will significantly lower the total supply. However, controlled issuance will continue to meet future needs. The authors say this fixes Fully Diluted Valuation (FDV) inconsistencies that can discourage buyers.
Currently, Hyperliquid’s FDV is $49 billion, including locked tokens. The actual market valuation, excluding locked tokens, is about $16 billion.
The proposal has sparked debate in the crypto community. Alpen from Comfy Capital supports it, calling it a move that “provides more clarity” and “fixes a broken FDV metric.”
However, some critics disagree. One user argued that burning tokens reduces liquidity and funds for business growth. He said, “I just don’t get how burning money helps a business.”
Token Utility and Fee Structure
Hyperliquid’s HyperCore platform supports these changes. Most trading fees from perpetual and spot markets go toward buybacks or token burns. HyperEVM charges transaction fees in HYPE tokens, which are fully burned.
The system is designed to reduce supply and increase the long-term value of HYPE tokens.
