Hyper Foundation Proposes Permanent Burn of All HYPE in Hyperliquid Assistance Fund

The Hyper Foundation has put forth a significant proposal: to permanently burn all HYPE tokens held within its Hyperliquid Assistance Fund through a validator vote. This move aims to remove these tokens from the circulating supply, pending approval by the validators.

Key Takeaways

Permanent Burn Proposal: HYPE tokens in the Assistance Fund are proposed to be permanently burned.
Validator Vote Required: Approval is needed from validators to recognize the burn.
Automated Conversion: The Assistance Fund automatically converts trading fees into HYPE, accumulating in a public address that cannot be accessed.
Community Involvement: Validators will vote on the proposal, and token holders can support aligned validators.
Supply Impact: If approved, this action will restrict the total supply and eliminate 37 million HYPE from calculations.

Hyperliquid Assistance Fund tokens face permanent burn vote

Summary of the Proposal

On December 17, the Hyper Foundation shared this governance proposal through its official channels and governance forum. The key point is to take the HYPE currently in the Hyperliquid Assistance Fund out of circulation.

Details on the Burn Proposal

As per the proposal, validators are being asked to formally acknowledge the HYPE tokens within the Hyperliquid Assistance Fund as permanently burned. This is possible despite no actual on-chain transaction occurring, as the tokens are already stored in a designated address that has never had a private key, rendering them inaccessible.

The Assistance Fund is responsible for converting trading fees into HYPE tokens through an automated process in Hyperliquid’s L1 execution framework. The tokens accumulate in a public address that functions similarly to a burn address due to the lack of a private key.

A “Yes” vote by the validators would create a binding consensus that future upgrades to access these funds will not be authorized. The Hyper Foundation clarified that no technical modifications are needed since the tokens are already mathematically unreachable.

Current community estimates suggest that the Assistance Fund holds approximately 37 million HYPE, which constitutes over 10% of the circulating supply. Formal removal of these tokens would mean they are also excluded from total supply calculations.

Validator Voting Process and Timeline

The decision will go through a stake-weighted process involving validators. They need to indicate their stance on the governance forum by December 21 at 04:00 UTC. After this, token holders can delegate their stakes to validators that support their views until December 24 at 04:00 UTC, when the final decision will be made.

If the proposal receives approval, it will enforce a more restrictive supply model by ensuring that the Assistance Fund balance cannot be utilized in the future for grants, development, or emergency interventions. The Foundation has indicated that the outcome of this vote will confirm whether the Assistance Fund balance is permanently excluded from calculations regarding supply.

This voting process follows previous community discussions focused on reducing supply in 2025, including a proposal in September that considered a 45% reduction of the total supply but failed to progress.

As of 2025, Hyperliquid has emerged as a leading venue for on-chain perpetuals by volume and fee revenue. A significant portion of these fees continues to contribute to the Assistance Fund via the protocol's automated conversion process, which plays a crucial role in shaping the HYPE supply dynamics.