Hyperliquid Governance Vote Seeks to Render $1B Assistance Fund Inaccessible

The Hyper Foundation has put forth a proposal for validators to officially declare that HYPE tokens in the Hyperliquid protocol’s Assistance Fund are permanently inaccessible. This decision would exclude these tokens from both the circulating and total supply of the asset.

Key Takeaways

Proposal Overview: The Hyper Foundation suggests that HYPE tokens in the Assistance Fund be permanently deemed inaccessible.
Financials: The Assistance Fund currently holds around $1 billion in HYPE tokens.
Effect on Supply: Although tokens would be labeled as burned, the proposal clarifies that it does not reduce the existing supply but clarifies governance accounting.
Institutional Interest: The move aligns the token supply metrics with Hyperliquid’s operational design, particularly as institutional investors show increased interest.
Trading Volume: Hyperliquid has recorded significant trading activity, marking over $205 billion in trading volume for the last 30 days.

Hyperliquid governance vote aims to permanently sideline $1B Assistance Fund

Summary of the Proposal

The Assistance Fund operates as a core mechanism within the layer-1 network, converting trading fees into HYPE tokens and directing them to a specific system address. Currently, this address holds approximately $1 billion in tokens. The design of this address lacks any control features, meaning the funds cannot be recovered without a significant protocol change known as a hard fork. According to the Hyper Foundation, voting “Yes” would mean that validators consider the HYPE tokens in the Assistance Fund as effectively burned.

Native Markets, responsible for issuing the Hyperliquid-native stablecoin USDH, noted that 50% of the yield from the stablecoin’s reserves is sent to the Assistance Fund and turned into HYPE tokens. If the validator vote passes, these contributions would officially be acknowledged as burned.

Source: Hyper Foundation

Understanding the Proposal and Its Implications

The term “burned” in the context of this proposal does not imply a reduction in the actual token supply. Instead, it clarifies the treatment of tokens that originate from trading fees, thereby eliminating confusion about how Hyper’s total supply is calculated. This is especially pertinent given the growing interest from institutional investors in Hyperliquid’s model.

Recent analysis from financial services firm Cantor Fitzgerald highlighted Hyperliquid as a protocol that redistributes nearly all its fee-based revenues back to tokenholders via automated repurchases. As of 2025, Cantor estimated that Hyperliquid had amassed approximately $874 million in fees year-to-date. Notably, 99% of these fees are funneled through the Assistance Fund to buy back HYPE tokens. This creates an environment where the circulating supply is believed to be on the decline. However, the Foundation emphasizes that the funds in the Assistance Fund were never meant to be used or recoverable.

This governance vote aims to align the actual supply of HYPE tokens with the underlying design of the protocol, ensuring clarity rather than creating artificial scarcity retrospectively.

Hyperliquid's Market Position

Hyperliquid is emerging as a leading player in the perpetual decentralized exchange (DEX) market. Recent insights from DefiLlama indicate that the protocol achieved over $205 billion in trading volume from perpetual contracts within the past month, ranking it as the third-largest DEX for this category.

In addition, an ecosystem of Digital Asset Treasuries (DAT) is forming around HYPE. According to Cantor Fitzgerald, Hyperion DeFi (HYPD) has approximately $46 million in HYPE tokens within its treasury, while Hyperliquid Strategies (PURR) maintains around $340 million in HYPE holdings.

This analysis showcases Hyperliquid's influential role in the DeFi space and its potential appeal to both retail and institutional traders.

Related: 1.75M Hyperliquid tokens unlocked today, but was the price impacted?