Hyperliquid News Today: Hyperliquid Votes to Burn $1B HYPE Amid Bullish Institutional Push

Hyperliquid, a leading onchain perpetuals exchange, has initiated a validator vote to permanently remove over $1 billion in HYPE tokens from circulation by designating the tokens as burned. The Hyper Foundation, which oversees the protocol, has proposed the vote as a means of aligning supply metrics with the protocol's original design intent. This move follows recent community discussions on supply reductions and aims to lock in a more restrictive supply model by excluding the tokens from circulating and total supply calculations according to protocol documentation.

The tokens in question are held in the Assistance Fund, a protocol-level mechanism that automatically converts trading fees into HYPE tokens and routes them to a system address without a private key. This deliberate design makes the tokens mathematically unretrievable without a hard fork. By voting "Yes," validators would treat the Assistance Fund's HYPE as permanently destroyed, reducing uncertainty around supply calculations and potentially enhancing scarcity signals.

The proposal has generated strong interest among token holders and institutional investors, particularly in light of recent institutional coverage from Cantor Fitzgerald.

The firm has modeled a potential $200 billion valuation for HYPE based on the protocol's fee-driven revenue model, which Cantor compared to Solana's previous cycle. The firm highlighted that Hyperliquid's model returns nearly all fee revenue to tokenholders through automated repurchases, contributing to a declining circulating supply.

Institutional Interest and Supply Management

Cantor Fitzgerald's research note emphasized that Hyperliquid has generated roughly $874 million in fees year-to-date in 2025, with 99% of those fees funneled through the Assistance Fund. The firm described the burn proposal as a way to align supply metrics with protocol design rather than retroactively creating scarcity. This clarity is becoming increasingly relevant as institutional investors scrutinize token supply dynamics more closely.

The validator vote also aims to address potential confusion around token economics. While the proposal does not reduce the existing supply, it formalizes how the Assistance Fund's tokens are treated for governance and supply calculations. This distinction matters as Hyperliquid's fee-driven model attracts institutional capital, with the protocol seen as a yield-generating participant in the DeFi ecosystem through staking and validation.

Market Implications and Voting Timeline

The validator vote will determine whether the Assistance Fund's HYPE is recognized as burned, with the final outcome set for December 24. The process involves three stages: forum signaling, staking alignment, and a stake-weighted consensus. Validators who publicly signal "Yes" before December 21 will influence the final vote, which requires at least 66% of staked tokens to approve the proposal according to voting guidelines.

The potential removal of 37.114 million HYPE tokens, or 3.71% of the total supply, has already sparked bullish sentiment in the derivatives market. Open Interest (OI) in HYPE has increased by 1.63% in the last 24 hours to $1.53 billion, while the OI-weighted funding rate has surged to 0.0839%, indicating strong buying pressure. At press time, HYPE traded at $27.19, up 3.64% in the last 24 hours.

What This Means for Investors

The burn proposal could reinforce HYPE's deflationary narrative, potentially supporting price recovery amid rising demand for the token. Institutional investors have shown interest in Hyperliquid's tokenomics, with Cantor Fitzgerald viewing the protocol as a layer-1 platform capable of generating durable cash flows. The firm's valuation model assumes Hyperliquid will generate over $5 billion in annual fees and be valued at 50x earnings, a multiple historically associated with high-growth infrastructure assets.

However, the market's reaction to the vote remains uncertain. While some analysts view the burn as a positive supply shock, others caution that the impact will depend on the broader macroeconomic environment and regulatory developments in 2026. With institutional capital inflows expected to continue, the final outcome of the validator vote could shape investor sentiment in the coming months.