Hyperliquid’s governance vote proposes to classify roughly $1 billion worth of HYPE held in its Assistance Fund as permanently inaccessible. The action affects about 37 million HYPE tokens, or 13.7% of circulating and total supply, and aims to reduce perceived sell pressure and sharpen supply metrics to support token price recovery and institutional transparency.
Assistance Fund mechanics and supply accounting
The Assistance Fund automatically converts 97%–99% of trading fees into HYPE and routes those tokens to a protocol-controlled system address with no withdrawal keys. This address was intentionally designed without on-chain withdrawal functionality, meaning the balances cannot be retrieved without a protocol-level hard fork.
The current proposal does not execute an on-chain burn; instead, it requests validator-level, social consensus to treat the balance as non-spendable for accounting purposes. This effectively removes it from circulating supply metrics, and Native Markets, issuer of the USDH stablecoin, has stated that 50% of USDH reserve yield currently routed into the Assistance Fund would also be formally recognized as burned if the vote passes.
Governance process and market implications
The governance process is stake-weighted and driven by validator signaling followed by delegation. Approval would lower the protocol’s perceived circulating supply and is presented by proponents as a mechanism to recalibrate valuation metrics.
One reported valuation estimate projects a change in fully diluted valuation from about $49 billion to $16 billion when accounting for the sidelined tokens. Proponents argue the measure clarifies tokenomics for institutional investors and establishes an accounting precedent for fee-driven, auto-conversion models across decentralized finance. The proposal is positioned as supply-clarifying rather than an economic policy that alters fee flows or protocol yield models.
The vote frames a governance mechanism that treats protocol-held fee accruals as non-circulating through consensus, aiming to reinforce a deflationary narrative and institutional readability without executing a technical burn. Next verified milestone: validators must signal their positions by December 21 at 04:00 UTC, and token holders may delegate stake until December 24 at 04:00 UTC when the final result will be determined.
