A major crypto asset manager has suggested reducing the future issuance of HYPE tokens and community rewards by 45%, aiming to make the token easier to value for investors.
According to the proposal, unissued HYPE tokens allocated for future emissions and rewards would be revoked, and the tokens held in Hyperliquid’s Assistance Fund would be burned. Additionally, the current 1 billion token cap would be removed, allowing more flexibility for future issuance if needed.
The initiative, co-authored by a crypto researcher, will need approval from Hyperliquid’s governance system, where the proposing firm is a significant stakeholder.
The firm behind the proposal argues that the current market undervalues HYPE because it includes unissued tokens in its fully diluted valuation, which can distort investor perception. By adjusting the supply, they aim to make HYPE more attractive to both investors and stakers while maintaining the ability to fund future projects.
The plan would slash over 400 million HYPE from community rewards and future emissions and around 21 million from the Assistance Fund. This comes amid growing institutional interest in Hyperliquid, particularly following the launch of its new USD-backed stablecoin, USDH, which drew applications from multiple issuers, with Native Markets selected to issue it.
Despite strong support from some institutional investors, including Dragonfly’s managing partner, the proposal has faced criticism. Some experts warn that future emissions are critical for growth incentives, while others emphasize the need for a contingency fund in case of regulatory actions. Proponents maintain that the proposal changes only accounting and does not limit tokens available for emergencies.
HYPE reached a record high recently but has cooled since, partly due to expected token unlocks and market sell-offs by major investors.
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