Crypto Asset Manager DBA Proposes Radical 45% HYPE Supply Cut to Overhaul Hyperliquid Tokenomics

DBA drops a deflationary bomb on Hyperliquid's ecosystem—slashing nearly half the token supply in one bold move.

The 45% Supply Shock

Forget gradual token burns. DBA's proposal axes HYPE's circulating supply from day one, creating immediate scarcity in a market drowning in inflationary tokens. The asset manager targets Hyperliquid's core economic model, arguing current tokenomics can't sustain long-term growth.

Tokenomics Revamp

The cut forces Hyperliquid's ecosystem to redistribute value across a leaner supply structure. Staking rewards compress while governance power concentrates among remaining holders—a classic deflationary play that's either genius or desperation depending on your portfolio.

Market Mechanics Shift

Reduced supply could trigger buying pressure as exchanges recalibrate liquidity pools. But the real test comes when traders decide whether artificial scarcity beats organic demand—something traditional finance still can't figure out after centuries of practice.

DBA bets that in crypto, sometimes the best growth strategy is to simply make everything more expensive for everyone.

Hyperliquid Proposal Targets 442M HYPE Burn, Lifts 1B Cap

The plan includes three key measures: revoking authorization for 421 million unminted tokens reserved for future emissions and community rewards, burning 21 million HYPE from the protocol’s Assistance Fund, and removing the token’s current 1 billion cap.

Charbonneau said the fully diluted valuation of HYPE is distorted by token allocations that may never enter circulation, which he believes penalizes the protocol’s perceived value.

“Pre-allocating these tokens may unduly bias future capital allocation decisions,” he wrote.

The proposal comes as interest in the Hyperliquid ecosystem rises. Last week, the exchange launched a governance vote to select the issuer of its new USDH stablecoin, with Native Markets securing the role over rivals including Paxos and Frax.

Hyperliquid processed $330 billion in volume in July with just 11 team members.

Dragonfly managing partner Haseeb Qureshi backed the proposal, calling the nearly 50% community allocation an “amorphous slush fund.”

We propose several changes to Hyperliquid’s economic model

These are strictly positive modifications that more protocols will embrace

Hyperliquid https://t.co/SJNoxI7o0n pic.twitter.com/cyGb676TdO

He said growth incentives are valid but must be distributed transparently, not left to undefined governance decisions.

Critics, however, say the proposal could limit the platform’s flexibility. Crypto commentator Mister Todd called the idea “foolish,” arguing that future emissions are Hyperliquid’s most powerful tool for growth.

Others warned against reducing reserves that could be needed in case of legal or regulatory action.

Charbonneau pushed back, saying the proposal doesn’t reduce available HYPE in emergencies — it only changes how the tokens are accounted for.

The debate coincides with sharp market moves. HYPE recently surged to an all-time high of $59.30 before dropping 22% to $46.08 as market sentiment cooled.

Maelstrom Fund, led by Arthur Hayes, sold its entire HYPE holdings, citing concerns over $12 billion worth of token unlocks expected over the next two years.

The proposal will need to pass through Hyperliquid’s governance process before any changes take effect.

Native Markets Secures USDH Stablecoin Mandate on Hyperliquid

Hyperliquid has concluded its governance vote for the USDH stablecoin, awarding the mandate to Native Markets after a closely watched process that drew weeks of community debate and rival proposals.

All USDH proposals explained here: pic.twitter.com/tq1cA2NWP9

USDH, described by Hyperliquid as a “Hyperliquid-first, compliant, and natively minted” dollar-backed token, is intended to reduce the platform’s dependence on USDC and strengthen its spot markets.

Validators on the decentralized exchange voted in favor of Native Markets, a relatively new player backed by Stripe’s Bridge subsidiary, over established contenders including Paxos and Ethena.

The outcome followed a string of proposals offering aggressive revenue-sharing terms to win validator support, underscoring the scale of incentives attached to controlling USDH.