Hyperliquid community is anticipating dramatic changes into the HYPE token economy, with the aim of reducing its total supply by over 45%. This proposal is co-authored by popular crypto evangelists Jon Charbonneau and Hasu, aiming to eliminate unminted allocations, burn inactive reserves, and get rid of the excessive token supply.
The proposal addresses the issue of managing non-outstanding tokens, which can mess with valuation metrics and give investors a skewed view, ahead of incoming token unlocks.
As per the article, HYPE has a total supply of 1 billion, with around 333.92 million tokens actually in circulation. On the other hand, more than 547 million tokens are still locked up in Future Emissions & Community Rewards (FECR) and the Assistance Fund (AF).
Breaking down the proposal
The proposed changes involve canceling over 421 million unminted FECR tokens, burning 31.3 million AF tokens, and removing the 1 billion cap. As a result, the supply will significantly decrease. However, there will still be room for controlled issuance to meet future demands. Authors claim that this adjustment addresses Fully Diluted Valuation (FDV) inconsistencies that tend to deter potential buyers.
Hyperliquid’s FDV currently sits at $49 billion at present price, which also includes valuation of locked allocation. Given that those locked tokens are not in the market, the protocol’s actual valuation plummets to $16 billion.
The proposal has gained significant buzz within the crypto community, with some giving support while some criticizing. Alpen from Comfy Capital backed the move, saying it “provides more clarity” and “fixes a broken FDV metric that is incorrect.” However, not everyone agrees.
However, another X user argued that every $1 set on fire is $1 less for liquidity depth, spreads, BD, R&D, product expansion. “I just don’t get how burning money helps a business.” He stressed.
Token utility and fee mechanics
Hyperliquid’s HyperCore platform adds context to these changes. Nearly all trading fees, whether from perpetuals or spot markets, flow into buybacks or token burns. Moreover, HyperEVM charges transaction fees in HYPE, which are fully burned. The system is already focused on cutting down supply and boosting the long-term value of tokens.
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