A New Hyperliquid Community Proposal Seeks 45% Token Supply Cut, Sparking Heated Debate and Potential Upside for Holders

Written By Naetitia, CryptoDavid

As competition in the perpetual DEX sector intensifies, Hyperliquid is facing increasing challenges. A community proposal to burn 45% of HYPE has sparked widespread discussion among investors and users, aiming to address the gap between the token’s market capitalization and its fully diluted valuation.

The proposal, introduced on September 22, 2025, by Jon Charbonneau of DBA Asset Management and independent researcher Hasu via X posts, suggests burning uncast HYPE in the Future Emissions and Community Rewards pool and all tokens held in the Aid Fund, as well as removing the 1 billion token maximum supply cap.

As of September 23, 2025, HYPE trades at around $46.17, with a market capitalization of approximately $15.41 billion and a fully diluted valuation of $46.17 billion.

Proponents argue this adjustment could better align HYPE’s tokenomics with market expectations, similar to Ethereum and Solana’s infinite supply models. Critics, however, warn that burning large reserves and removing the supply cap could introduce risks to growth incentives and protocol sustainability.

Within 24 hours of being posted, the proposal had already been viewed over 455,000 times, sparking intense debate across the Hyperliquid community.

Proposal Background and Details

The current HYPE supply structure makes its FDV appear unrealistically high, limiting investor understanding and market pricing. HYPE’s genesis and current token distributions are as follows:

• Circulating supply: 337 million HYPE (~$16.5 billion market cap at $49 per HYPE)

• Future Emissions & Community Rewards (FECR): 421 million HYPE reserved for staking and community incentives, with no fixed issuance schedule

• Aid Fund (AF): 31.26 million HYPE, purchased daily from protocol revenue but held indefinitely

• Other allocations: Remaining tokens distributed among team and reserves

Crypto valuation metrics are a mess. They are inconsistent with TradFi accounting standards and are measured inconsistently across data providers.

The proposal is essentially an "accounting cleanup" to resolve discrepancies in FDV calculations across platforms, allowing major data providers like CoinMarketCap to recalculate FDV, which would significantly lower it and better reflect the current real market value.

To address the inflated FDV, Jon and Hasu’s proposal introduces three core measures:

1. Revoke FECR Authorizations Revoke the 421 million unissued tokens in the FECR pool. These tokens were originally intended for future staking and community incentives but lacked a defined issuance schedule. Revoking the authorizations eliminates potential uncertainty while allowing for re-approval through governance votes if future issuance is needed.

2. Burn AF Holdings Burn the 31.26 million HYPE currently held by the AF, as well as any HYPE the AF acquires in the future. Currently, the AF uses protocol revenue to buy back HYPE daily. Under the proposal, these tokens would no longer be held long-term and would be immediately burned upon acquisition.

3. Remove the 1 Billion Supply Cap Remove HYPE’s 1 billion total supply cap. While this may appear counterintuitive given the aim of reducing supply, it allows future token issuance, such as staking rewards or community incentives, to be determined through governance rather than allocated from reserved pools. Jon notes that the fixed supply cap is largely a vestige of Bitcoin’s model and is not a necessity for most tokens.

These changes aim to immediately reduce total supply by more than 45% while maintaining proportional ownership for existing holders. The proposal is purely an accounting adjustment to better align Hyperliquid’s financial representation with its underlying strategy, without impacting its ability to fund growth initiatives.

How the Supply Cut Could Slash FDV and Spark a HYPE Price Rally

The proposal's core appeal lies in its potential to reshape HYPE's market perception. High FDV has capped HYPE's upside, as investors shy away from tokens with "phantom supply."

Post-burn, the FDV could drop to around $25.5 billion, making HYPE appear undervalued relative to peers. Simulations suggest a 20% to 50% price surge in the short term, driven by improved metrics on platforms like CoinGecko.

For holders, this means "zero dilution" on current positions.

A holder with 1,000 HYPE today would retain the same proportional stake in the protocol economy, potentially amplified by scarcity. Broader market effects could include increased liquidity and institutional interest, as Hyperliquid's trading volume already exceeds $500 million daily.

However, risks abound. Opponents warn that depleting reserves might hobble growth tools, such as airdrops to attract users.

The AF, envisioned as an emergency buffer for hacks or regulations, could leave the protocol vulnerable. Moreover, removing the cap introduces uncertainty: unchecked emissions might erode trust if not governed transparently. Market data shows HYPE's 24-hour volume at $591 million, hinting at heightened volatility if the proposal advances.

Investors, Builders, and Analysts Clash Over HYPE Burn Proposal

The X thread on the proposal has ignited fierce community debate, accumulating over 80 replies within the first day.

On the opposing side, a highly upvoted comment with 2.8K views came from @pondermint, who stated, "Absolutely foolish and a disaster."

He argued that using future emissions is Hyperliquid’s most powerful growth and competitive tool, and that the proposal would lock in those holding large $HYPE positions while hindering ecosystem growth. He also criticized the post as one-dimensional and unsupported by evidence.

Supporters, however, voiced a different perspective. @0xjager remarked, "This is not a bad idea," highlighting that the proposal encourages a broader industry discussion on how token valuations are calculated. He called on platforms like CoinGecko and CoinMarketCap to reassess HYPE’s metrics more accurately.

Jon Charbonneau responded to numerous questions and objections throughout the thread, repeatedly emphasizing that the proposal merely represents "it just changes the accounting of it," framing it as an accounting adjustment rather than an economic shift.

Could the Aggressive Proposal Benefit Its Authors?

Questions naturally arise over whether the proposal might serve the personal interests of its authors. Jon Charbonneau and Hasu, the two proponents, bring distinct backgrounds to the discussion.

• Jon is a manager at DBA Asset Management, LLC and also a co-founder and general partner. He has extensive experience in cryptocurrency research, including leadership roles at Delphi Digital and prior work in structured credit at Deutsche Bank.

• Hasu is an independent cryptocurrency researcher known for in-depth analyses and industry insights, with no formal employment ties to any specific institution.

Regarding financial interests, Jon and his DBA-managed funds hold a material position in HYPE tokens, and he personally owns HYPE as well. The proposal’s supply reduction could increase scarcity and potentially boost market prices, indirectly benefiting his holdings.

Jon has framed the proposal as a method to correct misleading FDV metrics and improve market perception, which could align with his investment objectives.

Hasu’s holdings are not publicly disclosed, but his collaboration with Jon and involvement in the proposal suggest the possibility of indirect interest. His motivation appears more focused on academic and structural improvements to tokenomics, rather than personal financial gain.

Hyperliquid’s official channels have not issued any statements regarding the proposal.

The protocol remains silent, and no formal response has been provided as of now. The discussion continues to unfold within the community, highlighting both scrutiny and interest in the proposal’s potential impact.

HYPE’s Future: Valuation Reset or High-Risk Tokenomics Gamble?

If adopted, the proposal could usher HYPE into a new phase, compressing FDV while supporting ecosystem growth through clearer economic design.

• Short-term price gains seem likely, particularly amid broader crypto market recovery signals.

• Yet long-term success depends on balanced governance to mitigate reserve depletion and emission risks. Monthly team unlocks, worth approximately $500 million, add additional pressure.

This valuation shift raises a key question: can Hyperliquid maintain its position as the leading perpetual DEX while facing challenges from emerging competitors?

Aster exemplifies this threat, with its token skyrocketing to a market capitalization of $2.85 billion in just seven days. Furthermore, with an anticipated listing on Binance, its price and market cap could see further substantial growth. This surge underscores the competitive pressure Hyperliquid currently faces.

Meanwhile, HYPE has retreated from its all-time high near $60 to around $46 over the past two days amid broader market pullbacks, illustrating the tangible pressure and challenges it faces.

As of now, Hyperliquid has not provided any official response to the proposal. The proposal may serve as a demo or experimental case, and whether its insights will be adopted into official governance remains uncertain.

What is clear is that perpetual DEX narratives will continue to be a major market focus, and whether HYPE’s valuation will be reshaped is a story BlockFlow will keep monitoring, delivering the fastest and most up-to-date analysis.

Connect with us:

• Telegram: t.me/blockflownews
• Twitter: x.com/BlockFlow_News