Hyper Foundation Proposes Burning $1 Billion Worth of HYPE Tokens in Deflationary Power Move

One crypto foundation just proposed lighting a billion dollars on fire—and their community might actually cheer.

The Deflation Gambit

Token burns aren't new, but a proposal to incinerate $1 billion worth of a project's own supply in one go? That's a statement. It's the ultimate supply-side economics play, straight out of the crypto playbook: reduce the circulating tokens, and—in theory—each remaining one becomes more scarce, more valuable.

Scarcity as a Strategy

The math is simple, even if the market's reaction never is. Slash the available tokens, and you're betting on basic supply and demand to do the heavy lifting. It's a move that bypasses lengthy product development cycles and goes straight for the portfolio's jugular—perceived value. For holders, it's a signal that the foundation is financially committed, putting skin in the game instead of just printing more.

The Fine Print & The Market's Verdict

Of course, a burn doesn't magically create utility or user adoption. It's a financial lever, not a product roadmap. The market has seen this before—initial pops of excitement followed by the sober reality of whether anyone actually uses the thing. It's the crypto equivalent of a stock buyback, but with more hype and fewer SEC filings... for now.

Ultimately, a billion-dollar burn isn't just a transaction; it's a massive bet on psychology. The foundation isn't just managing tokens—they're trying to engineer a shortage. Whether that translates to lasting value or just another pump for the usual suspects to dump on remains the trillion-dollar question in an industry that never met a financial shortcut it didn't like.

TLDR

• Hyper Foundation proposes burning $1B in HYPE tokens through a vote by validators.

• Tokens in the Assistance Fund are currently irretrievable without a hard fork.

• Most validators plan to vote “Yes” to remove the HYPE tokens from circulating supply.

• A major $11M liquidation on Hyperliquid took place amid market volatility.

The Hyper Foundation has put forward a proposal that could remove nearly $1 billion worth of HYPE tokens from circulation. On December 17, the foundation posted a message on Discord asking for a vote on whether to consider HYPE tokens held in the Assistance Fund as “burned.” The vote is set to remain open until December 21, 2025.

The proposal revolves around a system where a portion of trading fees from the blockchain are converted into HYPE tokens. These tokens are stored in an Assistance Fund, which is designed to function as a continuous buyback-and-burn mechanism. Importantly, the fund is structured in a way that the tokens within it are irretrievable without a hard fork, making them mathematically impossible to recover.

This MOVE is intended to deflate the circulating supply of HYPE tokens, which could potentially benefit the token’s value by reducing the total available supply. As of now, around 37 million HYPE tokens are stored in the Assistance Fund, representing more than 13% of the circulating supply.

Hyper Foundation Token Burn Proposal and Validator Vote

The Hyper Foundation’s proposal involves treating the tokens in the Assistance Fund as “burned,” which WOULD effectively remove them from both the circulating and total supply of HYPE tokens.

The foundation has noted that no on-chain action is required, as the tokens are already stored in an address with no private key. The vote is a binding social consensus to never allow any protocol upgrades to access this address.

Most validators within the community have indicated their intention to vote “Yes” on the proposal. If approved, this would remove the 37 million tokens from the total supply, reducing the available amount of HYPE in circulation. This decision could also lead to a deflationary effect, putting upward pressure on the token’s value. However, the final result will depend on the outcome of the vote, which is based on stake-weighted consensus.

Liquidation Event Amidst Market Volatility

Amid this proposal, the broader market for cryptocurrencies has been facing high volatility. A major liquidation event recently took place on the Hyperliquid platform, where $11 million worth of HYPE-USD positions were liquidated. This was part of a broader downturn that saw $526 million liquidated across crypto markets in just 24 hours.

The liquidation event highlights the challenges faced by traders as the market continues to react to factors such as potential interest rate hikes and global economic uncertainty. Bitcoin’s price saw brief volatility, with a rally to $90,000 before settling at around $85,000, further fueling the liquidation wave.

The $11 million liquidation on Hyperliquid was one of the largest individual orders during the downturn. It also underscores the fragility of the crypto market, as large liquidations can cause sharp price movements that impact both small and large holders.