4h ago• 3 min read
Hyperliquid Community Proposes 45% Supply Cut Amid Unlock Fears
Hyperliquid's community is debating a proposal to slash HYPE's total supply by 45% through burning 450+ million tokens, as members seek to address valuation concerns ahead of November's major unlock event.
Key takeaways
✂️ Major Supply Cut: Proposal would burn 450+ million HYPE tokens, reducing total supply from 1 billion to ~550 million.
🔥 Token Burns: Plan includes burning 421M community reward tokens and 31M from the Assistance Fund buybacks.
🏛️ Governance Debate: Community members split on proposal, with some opposing impact on future user rewards.
💰 Valuation Fix: Supporters argue excess authorized supply creates unfair market penalty for the protocol.
🚫 Remove Hard Cap: Controversial element would eliminate Bitcoin-style fixed supply limit for future flexibility.
Deep dive
The supply reduction proposal, submitted by DBA investment manager Jon Charbonneau and researcher Hasu, represents a significant attempt to address what they see as structural tokenomics issues that penalize HYPE's valuation.
The plan would eliminate 421 million tokens earmarked for community rewards and 31 million from the Assistance Fund, arguing that these large reserves create downward pressure by skewing market expectations of future distribution.
The proposal also controversially suggests removing HYPE's hard cap of one billion tokens, arguing that unlike Bitcoin's immutable social contract, successful blockchains like Ethereum and Solana adjust their issuance policies through community consensus.
Critics worry this could negatively impact community incentives, but proponents argue these tokens "aren't owed to anyone" currently and that the changes would provide "material economic benefits with little downside." The debate reflects broader tensions within the community about how to balance long-term growth incentives with immediate price pressures from upcoming unlocks.
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