Timeline and Voting Process for Hyperliquid’s HYPE Burn

Hyperliquid is considering a major recovery plan proposed by crypto asset manager DBA. The proposal is to cut down the total HYPE supply by 45% and lower the perceived fully diluted valuation (FDV) to make the tokenomics more attractive to institutional investors. 

Key points 

• Hyper Foundation is proposing to burn all HYPE tokens in the Assistance Fund. 
• About 37 million HYPE tokens will be burned to reduce the total supply. 
• HYPE prices have rallied since the Hyperliquid community got excited about this proposal.  

About Hyperliquid (HYPE)

Hyperliquid is a high-performance decentralized exchange (DEX) built on its own high-speed custom Layer 1 blockchain. HYPE is the native cryptocurrency of Hyperliquid. The platform solves low settlement and high fees in DeFi derivatives. It uses a HyperBFT consensus mechanism that supports over 200,000 orders per second with sub-second finality and zero gas fees for trading. Currently, over 336 million HYPE tokens are circulating in the market. 

Hyper Liquid Foundation to Burn of 45% of Supply  

Hyper Liquid Foundation is forwarding a bold proposal for its ecosystem, which could transform the token’s future. The foundation is waiting for the validator to vote on the proposal to implement the massive burn. This decision aims to revitalize the interest in institutional investors by reducing the perceived Fully Diluted Valuation (FDV). 

Hyper Liquid Foundation believes that this massive burn can enhance the investor’s confidence in HYPE and increase its prices. The Hyperliquid (HYPE) tokens have been down due to various factors, such as liquidation, increased competition, and a shift in investor sentiment. 

One of the key issues of the massive burning process is that the HYPE address (0xfefefefefefefefefefefefefefefefefefefefe) has no private key, and tokens sent to this are “locked” forever. Moreover, every time a trade happens on Hyperliquid L1, a portion of the fee is automatically converted into HYPE and sent to this locked address. According to the proposal, Hyper Liquid Foundation wanted to formally vote and recognize these tokens, valued at approximately $1 billion, as permanently burned. 

Voting Timeline and Other Processes 

The validator will consider the Hyper Liquid Foundation’s proposal to burn 45% of the HYPE tokens. If they vote “Yes,” it would mean that validators agree to permanently remove the tokens from circulation. Under this proposal, the Hyper Liquid Foundation also states that if the validators vote Yes, it would also solidify agreement to never perform a protocol upgrade that would permit access to the locked tokens. 

Validators are required to cast their vote in the forum by December 21 at 04:00 UTC. After validators cast their votes, HYPE token holders can stake their tokens with a validator matching their view. The outcome will be based on the stakeholder-weight consensus, which will close on December 24. 

Massive Burn Proposal Results in Token Price Surge 

The Hyper Liquid Foundation’s proposal to burn HYPE tokens has triggered a price recovery. The move to reduce the HYPE token supply has boosted investor confidence. The community also expects a major shift in the token dynamics as the deadline approaches. 

Additionally, users also expect the launch of the Bitwise Hyperliquid ETF (BHYP) on NYSE Arca soon. This news has also brought back investors’ confidence in the token, as this spot exchange would provide a regulated exposure. 

HYPE token prices have increased by 2% after the HYPE burn proposal. HYPE is currently trading at $26.66; however, the 24-hour volume has dropped by 5% over the last 24 hours. According to the Coin Glass data, there is a massive HYPE purchase in the derivatives market. 

Bottomline 

Hyper Liquid Foundation’s proposal to remove approximately 37.11 million HYPE tokens from the supply is considered to be an effective solution to increase investor confidence. The tokens are already in an inaccessible system;  if the proposal is accepted, a technical consensus will be established according to which the tokens can never be recovered or reused. Hyperliquid believes that the scarcity of tokens can raise demand for HYPE tokens and reestablish its place in the crypto market.