Validator proposal aims to formalize HYPE tokens as permanently inaccessible amid rising institutional interest
A new governance proposal within the Hyperliquid ecosystem is seeking to resolve long standing questions around token supply by formally sidelining a large pool of protocol-held assets. The vote focuses on whether HYPE tokens accumulated through the protocol’s Assistance Fund should be treated as permanently inaccessible and excluded from supply calculations.
Assistance Fund Tokens Proposed as Effectively Burned
The Hyper Foundation has asked validators to approve a binding consensus recognizing that HYPE tokens held in the Assistance Fund system address are irretrievable by design. The fund automatically converts trading fees into HYPE and routes them to a protocol-level address with no control mechanisms. At present, this address holds roughly $1 billion worth of HYPE tokens.
If approved, validators would agree to treat these tokens as effectively burned, despite no onchain reduction in total minted supply. Accessing the funds would require a hard fork, which the proposal explicitly seeks to rule out.
Clarifying Supply as Institutional Attention Grows
The distinction has gained importance as Hyperliquid’s fee driven repurchase model attracts institutional scrutiny. Estimates suggest the protocol has generated approximately $874 million in fees year-to-date, with 99% of fees routed through the Assistance Fund to acquire HYPE.
The proposal aims to align circulating supply metrics with actual protocol design, reducing ambiguity for investors rather than retroactively creating scarcity.
Hyperliquid remains a leading player in decentralized perpetuals, processing over $205 billion in trading volume in the past 30 days. At the same time, digital asset treasury firms collectively hold hundreds of millions of dollars in HYPE, reinforcing the importance of transparent and consistent supply definitions.
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