Hyperliquid Proposal Aims To Confirm $1B HYPE Tokens As Burned

The Hyper Foundation has submitted a proposal to confirm $1 billion in HYPE tokens held in Hyperliquid’s Assistance Fund system address as permanently inaccessible or burned.

According to the project’s team, the Assistance Fund is a protocol-level mechanism that is embedded in the layer-1 network’s execution. This mechanism automatically converts trading fees into HYPE and then routes them to a designated address. 

The system was designed without any control mechanisms, which means that the funds cannot be accessed or retrieved without a hard fork. 

Data from Hypurrscan shows that the address, “0xfefefefefefefefefefefefefefefefefefefefe,” holds nearly $1 billion worth of tokens as of 6:29 a.m. EST.  

If the community votes yes on the proposal, it would permanently remove the tokens from the circulating and total supply. 

Validators are required to signal their intent in the governance forum by Dec. 21, 4:00 a.m. UTC. To vote, users can stake to a validator who matches their view by Dec. 24, 4:00 a.m. UTC. The Hyper Foundation said that the result will be based on stake-weighted consensus. 

Distinction Of HYPE’s Circulating Supply Has Become More Relevant

While the proposal from the team is to recognize that the tokens in the Assistance Fund are “burned,” it does not actually remove the tokens from HYPE’s effective supply. Instead, the proposal is aimed at reducing ambiguity around that supply.

That distinction has become more relevant as more institutions make their way to the Hyperliquid ecosystem, mainly due to its fee-driven model. 

In a research note that covered HYPE digital asset treasury (DAT) companies, the financial services firm Cantor Fitzgerald framed Hyperliquid as a protocol that returns almost its entire fee revenue to token holders through automated purchases. 

The firm also estimated that Hyperliquid has generated around $874 million in fees year-to-date (YTD) as of 2025. Cantor added that 99% of protocol fees are currently routed through the Assistance Fund mechanism to repurchase HYPE. 

The firm also said that those repurchases are a big contributor to the decline in HYPE’s circulating supply. However, Hyper Foundation clarified in its recent proposal that Assistance Fund balances were never meant to be spendable or recoverable. 

Hyperliquid Remains One Of The Top Perpetual Decentralized Exchanges

Hyperliquid has maintained its position among the top decentralized perpetual exchange platforms. According to data from DefiLlama, the protocol has recorded more than $205 billion in trading volume in the past 30 days. 

Top perp decentralized exchanges by volume (Source: DefiLlama)

HYPE Price In A Downtrend

The proposal comes as HYPE trades in a medium-term downtrend. Over the past month, the altcoin’s value has plummeted more than 30%, according to CoinMarketCap. The crypto saw a minor uptick in the past 24 hours to trade at $27.11 as of 5:52 a.m. EST.

Daily chart for HYPE/USD (Source: GeckoTerminal) 

The daily chart for HYPE shows that the token has been in a descending channel over the past few weeks. Technical indicators such as the Moving Average Convergence Divergence (MACD), the Relative Strength Index (RSI), and short-term Exponential Moving Averages (EMAs) show that sellers have the upper hand against buyers.

Until the price of HYPE breaks above the 9 EMA, which is acting as a dynamic resistance and is confluent with the upper boundary of the bearish channel, the crypto is likely to remain in its downtrend. However, a break above that barrier could see the altcoin soar to $35.98.