Hyperliquid Targets 13% Supply Cut With 37M HYPE Burn to Revive Token Price

Hyperliquid is trying to restore users' faith in its token after a pretty sharp market downturn by proposing a serious supply reduction.

Written by: Arslan Butt • Wednesday, December 17, 2025 • 2 min read

• Last updated: Wednesday, December 17, 2025

Quick overview

Hyperliquid has proposed a governance plan to burn 37 million HYPE tokens from its Assistance Fund to restore user confidence after a significant market downturn.
This move would reduce the circulating supply of HYPE by over 13%, marking a significant deflationary event for the token.
The proposal has garnered some support from network validators, indicating a potential positive shift in sentiment towards HYPE.
Market reactions have been cautiously optimistic, with a slight increase in HYPE's price and a rise in futures open interest, suggesting renewed interest from investors.

Hyperliquid is trying to restore users’ faith in its token after a pretty sharp market downturn by proposing a serious supply reduction. They’ve put forward a governance proposal on December 17 to get rid of all the HYPE tokens held in their Assistance Fund – that’s a drastic move that would instantly shrink both the tokens in circulation and total supply.

This comes at a time when HYPE has dropped by over half from its recent highs, which is causing problems for the entire Hyperliquid ecosystem. If the proposal gets approved by the people who validate the network, then it would see around 37 million HYPE tokens being taken out of the mix – that’s over 13% of the tokens currently in circulation, and that’s a significant deflationary event.

The Assistance Fund collects fees on trades made on the network and automatically converts them into HYPE. Still, the tokens are stored in a system address that lacks a private key, so they cannot be accessed unless the network undergoes a major update.

How the Assistance Fund Burn Works

The plan is to get rid of all the HYPE tokens currently in that Assistance Fund and ensure that any additional tokens deposited in the future are removed from the supply. The people who validate the network would also promise never to approve any changes that might unlock those tokens.

Here are some of the key bits of the proposal:

Burn 37 million HYPE tokens that are currently in the Assistance Fund
Make sure that any more tokens that get put in the fund in the future get burned too
Essentially, make the fund address unreachable so they can’t be unlocked again
Keep the network from getting an update that would recover any of the locked tokens

The people validating the network must let the proposal holders know how they feel by December 21 at 04:00 UTC. Then the people who own HYPE can put their weight behind the validators up until December 24 at 04:00 UTC, when the final vote gets counted.

Several of the validators have already voted for the proposal, including Kinetiq x Hyperion, which is a good indication of where things might be heading.

Market Reaction and Broader Implications

Hyperliquid Price Chart - Source: Tradingview — Hyperliquid Price Chart – Source: Tradingview

The market has had a cautious, positive reaction to all of this. After the news broke, HYPE rose by 2% to around $26.66, then traded between $26.21 and $28.02 over the next day. Trading volume actually dropped by 5%, suggesting that people are waiting for a bit more clarity on HYPE’s governance before they are happy to put their money back on the table.

However, the activity on the derivatives market tells a different story:-

Futures open interest in HYPE went up by 3% to $1.52 billion
Over the course of 4 hours, the open interest had increased by nearly 4%
The CME and Binance both showed gains of over 5%

This proposal also comes at a time of renewed interest from big investors. Bitwise has added to its filing to launch a spot Hyperliquid ETF and included a 0.67% management fee.

All of these things mean that the HYPE burn isn’t just a gesture; it could be a major deal for the token’s supply and credibility in the long run.

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ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.