Major proposal aims to make Hyperliquid’s HYPE token more attractive to investors
A leading crypto asset management firm is pushing for a dramatic reduction in the supply of HYPE, the token powering decentralized derivatives exchange Hyperliquid. The plan would slash the token’s supply by 45% in an effort to improve HYPE’s valuation and make its tokenomics more appealing to investors.
The proposal to reduce HYPE supply
DBA Asset Management investment manager Jon Charbonneau, alongside pseudonymous crypto researcher Hasu, published the proposal on X. It suggests three major changes to Hyperliquid’s economic model:
- Revoking authorization for all unminted HYPE tokens allocated to future emissions and community rewards (FECR).
- Burning all HYPE currently held in Hyperliquid’s Assistance Fund (AF).
- Removing HYPE’s fixed supply cap of 1 billion tokens.
If approved through Hyperliquid’s governance process, the move would cut 421 million tokens from the emissions and rewards category and 21 million from the assistance fund.
Charbonneau argued that HYPE’s valuation is being distorted by its fully diluted value, which includes tokens that haven’t yet been issued. By slashing this supply, he believes the protocol would become more appealing to both investors and stakers, while still maintaining flexibility to issue tokens for future initiatives.
Institutional support and pushback
The proposal has gained backing from institutional investors. Haseeb Qureshi, managing partner at Dragonfly, agreed with Charbonneau’s assessment, criticizing the nearly 50% community allocation as an “amorphous slush fund.” He noted that growth incentives should exist but must be distributed transparently.
Not everyone is on board. Crypto commentator Mister Todd dismissed the idea as “absolutely foolish and a disaster,” arguing that future emissions remain Hyperliquid’s strongest growth tool. Others suggested that keeping reserves is crucial in case of regulatory fines or sanctions.
Charbonneau countered by clarifying that the plan does not reduce the tokens available for such scenarios—it simply changes how they are accounted for.
Hyperliquid’s ecosystem growth
The debate comes amid rising attention on Hyperliquid’s ecosystem. The platform recently launched USDH, its U.S. dollar stablecoin, and held a governance vote to decide its issuer. Paxos, Frax, Sky, Agora, and Native Markets participated, with Native Markets winning the mandate last week.
Despite operating with just 11 team members, Hyperliquid processed $330 billion in trading volume in July, cementing its reputation as one of the most efficient crypto trading platforms. Charbonneau added that the rollout of USDH is expected to significantly boost Hyperliquid’s revenue.
HYPE price action after new highs
The proposal comes shortly after HYPE surged to an all-time high of $59.30, outperforming much of the crypto market. However, the token has since dropped more than 22%, trading at around $46.08, as selling pressure increased.
Notably, Maelstrom Fund, led by Arthur Hayes, sold its entire HYPE position. Hayes explained that the exit was driven by concerns over nearly $12 billion worth of token unlocks expected over the next two years.
The road ahead
The governance vote will determine whether Hyperliquid proceeds with the 45% HYPE token supply cut, a move that could reshape its tokenomics and market perception. If passed, it would mark one of the most aggressive token supply reductions in recent memory, with the potential to strengthen Hyperliquid’s position among leading crypto derivatives exchanges.
