Hyperliquid Weighs 45% HYPE Supply Cut Amid $12B Unlock Concerns

Decentralized derivatives exchange Hyperliquid is at the center of a heated debate after investment manager Jon Charbonneau and researcher Hasu proposed a 45% cut to the HYPE token supply.

The plan, unveiled on Sept. 22, would revoke and burn more than 450 million tokens originally allocated to the Future Emissions and Community Rewards (FECR) fund and the Assistance Fund.

The authors argue that Hyperliquid’s current supply structure distorts valuation metrics and unfairly penalizes the token in the eyes of investors. By eliminating unused allocations, they believe the protocol would improve transparency and capital efficiency, ultimately boosting long-term confidence.

“Hyperliquid currently has a large amount of authorized non-outstanding supply,” they wrote, stressing that such reserves weigh heavily on market perception.

Removing the Hard Cap Sparks Controversy

Beyond the proposed burn, Charbonneau and Hasu called for the removal of Hyperliquid’s 1 billion token cap. Unlike Bitcoin’s fixed 21 million supply, they argued that flexible issuance models, similar to Ethereum and Solana, may better serve Hyperliquid’s growth.

They reasoned that if future opportunities required additional token issuance, the community would likely approve it, framing the supply cap as an unnecessary cultural relic. This part of the proposal, however, has drawn sharp criticism.

Supporters like Dragonfly’s Haseeb Qureshi endorsed the move, while skeptics warned that reducing emissions could hinder ecosystem expansion and reduce Hyperliquid’s competitive edge.

Market Impact: Hayes Exit Adds Fuel to Selloff

The proposal comes at a turbulent time. Fears of a looming $12 billion HYPE token unlock have already put the market on edge.

Adding to this pressure, BitMEX co-founder Arthur Hayes recently sold his entire HYPE position, 96,628 tokens, for over $4.8 million in profits. Hayes, who once predicted the token would surge 126x in three years, revealed the sale funded a Ferrari Testarossa deposit.

The timing coincides with team tokens representing nearly 24% of supply set to unlock in November, a schedule analysts warn could flood the market with hundreds of millions of dollars in sell pressure monthly.

Despite the turbulence, Hyperliquid remains one of the fastest-growing DEX platforms, with August trading volumes peaking at $3.4 billion. Whether the proposed reforms will steady HYPE’s trajectory, or deepen market divisions, remains to be seen.