A major driver behind Hyperliquid’s success in 2025 is its buyback system, with the Hyperliquid Assistance Fund (AF) buying back more than 37 million HYPE tokens since its inception. While most supporters considered the tokens in the AF already burned, as they were removed from circulation, the Hyper Foundation is looking to make it official.
An announcement on Dec. 16 from the Foundation reads: “The Hyper Foundation is proposing a validator vote to formally recognize the Assistance Fund HYPE as burned, removing the tokens permanently from the circulating and total supply.”
If passed, the roughly $920 million worth of HYPE currently in the Hyperliquid Assistance Fund, plus future revenues, would be permanently burned.
Initially, HYPE rallied on the announcement, surging back up to $28 before being smacked back down below $27 shortly after. Today, HYPE has taken another beating alongside the rest of the market, extending the token’s monthly losses to 35%.
HYPE 1-month chart. Source: CoinGecko
Validators are already voicing their intent to support the token burn, with liquid staking protocol Kinetiq sharing on their social media page that the Kinetiq x Hyperion validator has opted in favor of the burn.
The validators must signal intent via governance by Dec. 21, and the result will be decided via stake-weighted consensus on Dec. 24.
While bulls are anticipating the token burn, some are wary of Hyperliquid’s potential insurance options in the case of a future emergency.
While the fund's name could imply its potential use in an emergency, its primary function appears to have been to accumulate and hold HYPE out of circulation to support the asset's price. Current Hyperliquid documentation notes, however, that the assistance fund "requires validator quorum to use in special situations."
If validators agree to the burn proposal, then tokens in the fund will no longer be accessible for any use. In its X post yesterday, the Hyper Foundation clarified, "This vote is binding social consensus to never authorize a protocol upgrade to access this address."
The Defiant reached out to the Hyperliquid team for comments on the move, but did not hear back by press time.
