Crypto asset manager DBA has proposed cutting the total supply of HYPE by 45% in a bid to overhaul the tokenomics of decentralized derivatives exchange Hyperliquid.
Key Takeaways:
DBA has proposed a 45% reduction in HYPE’s total supply to improve tokenomics and investor confidence. The plan includes burning 442 million tokens and removing HYPE’s 1 billion supply cap. The proposal has sparked debate, with supporters citing clarity and critics warning of reduced growth flexibility.The firm, which holds and actively stakes HYPE, says the move would boost the token’s appeal to investors by removing market uncertainty around unused allocations.
DBA investment manager Jon Charbonneau published the proposal on X, co-authored with crypto researcher Hasu.
Hyperliquid Proposal Targets 442M HYPE Burn, Lifts 1B Cap
The plan includes three key measures: revoking authorization for 421 million unminted tokens reserved for future emissions and community rewards, burning 21 million HYPE from the protocol’s Assistance Fund, and removing the token’s current 1 billion cap.
Charbonneau said the fully diluted valuation of HYPE is distorted by token allocations that may never enter circulation, which he believes penalizes the protocol’s perceived value.
“Pre-allocating these tokens may unduly bias future capital allocation decisions,” he wrote.
The proposal comes as interest in the Hyperliquid ecosystem rises. Last week, the exchange launched a governance vote to select the issuer of its new USDH stablecoin, with Native Markets securing the role over rivals including Paxos and Frax.
Hyperliquid processed $330 billion in volume in July with just 11 team members.
Dragonfly managing partner Haseeb Qureshi backed the proposal, calling the nearly 50% community allocation an “amorphous slush fund.”
He said growth incentives are valid but must be distributed transparently, not left to undefined governance decisions.
Critics, however, say the proposal could limit the platform’s flexibility. Crypto commentator Mister Todd called the idea “foolish,” arguing that future emissions are Hyperliquid’s most powerful tool for growth.
Others warned against reducing reserves that could be needed in case of legal or regulatory action.
Charbonneau pushed back, saying the proposal doesn’t reduce available HYPE in emergencies — it only changes how the tokens are accounted for.
The debate coincides with sharp market moves. HYPE recently surged to an all-time high of $59.30 before dropping 22% to $46.08 as market sentiment cooled.
Maelstrom Fund, led by Arthur Hayes, sold its entire HYPE holdings, citing concerns over $12 billion worth of token unlocks expected over the next two years.
The proposal will need to pass through Hyperliquid’s governance process before any changes take effect.
Native Markets Secures USDH Stablecoin Mandate on Hyperliquid
Hyperliquid has concluded its governance vote for the USDH stablecoin, awarding the mandate to Native Markets after a closely watched process that drew weeks of community debate and rival proposals.
USDH, described by Hyperliquid as a “Hyperliquid-first, compliant, and natively minted” dollar-backed token, is intended to reduce the platform’s dependence on USDC and strengthen its spot markets.
Validators on the decentralized exchange voted in favor of Native Markets, a relatively new player backed by Stripe’s Bridge subsidiary, over established contenders including Paxos and Ethena.
The outcome followed a string of proposals offering aggressive revenue-sharing terms to win validator support, underscoring the scale of incentives attached to controlling USDH.
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