The Hyper Foundation has proposed that all HYPE held in the Hyperliquid Assistance Fund be treated as permanently incinerated and the tokens removed from supply through a validator vote.
summary
- The Hyper Foundation proposed a validator vote that would treat all HYPE in the support fund as permanently incinerated.
- No on-chain action is required as the token is already locked to the system address without a private key.
- Voting will run until December 24th, and more than 10% of HYPE could be removed from circulation and total supply.
The governance proposal announced by the Hyper Foundation will remove all HYPE held in the Hyper Liquid Support Fund from the circulating supply, pending approval from verifiers.
The proposal was published on December 17th through Hyper Foundation’s official channels and governance forums.
Support fund tokens will be treated as burnt.
The proposal would require validators to recognize HyperLiquid (HYPE) tokens accumulated in a backing fund as permanently burned, even though no on-chain transactions have taken place. The token already exists at a system address that is not controlled by the private key, so it cannot be accessed without protocol-level intervention.
The Hyper Foundation officially recognizes the support fund HYPE as burnt and proposes a verification vote to permanently remove the token from circulation and total supply.
For context, the Support Fund, as part of its part, converts trading fees into HYPE in a fully automated manner.
— Hyper Foundation (@HyperFND) December 17, 2025
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The backing fund converts the protocol’s trading fees into HYPE through an automated process built into Hyperliquid’s L1 execution layer. These tokens are accumulated in public address addresses. Public address addresses do not have a private key and actually function like write addresses.
A “yes” vote would establish a binding social agreement that the protocol will never allow upgrades to access these funds. The foundation said no technical changes were needed as the tokens were already mathematically irrecoverable.
The community estimates that the support fund balance is approximately 37 million HYPE, which is more than 10% of the circulating supply. If officially removed, the token will also be excluded from the total supply calculation.
Validator voting and timing
This decision is made through a stake-focused validator process. Validators must declare their intentions in the Governance Forum by 04:00 UTC on December 21st. Token holders can then delegate their stake to validators that suit their position until December 24th at 04:00 UTC, when the final outcome is determined.
If approved, the changes would lock in a more restrictive supply model by blocking the use of support fund balances for future grants, development and emergency measures. The foundation said the vote will determine whether the support fund balance will be permanently removed from supply calculations.
The vote follows previous community discussions about supply cuts in 2025, including a proposal in September that considered a 45% cut in total supply but did not move forward.
In 2025, Hyperliquid ranked as the top on-chain permanent venue in terms of volume and fee income. The majority of these fees continue to flow into the support fund through the protocol’s automatic conversion process. This mechanism has been central to how the supply dynamics of HYPE have evolved over time.
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