Hyperliquid's Buybacks Turn Out to Be Permanent Token Burns

Hyper Foundation has proposed burning the HYPE tokens that were purchased using Hyperliquid's trading fees and are currently held in the "Assistance Fund".

But the most interesting part of the announcement was something else: those tokens have effectively already been destroyed, because no one has - or can have - the private key to the Assistance Fund address.

The buyback program that uses exchange fees to buy HYPE tokens has been running for about a year. Throughout this entire period, discussions across various forums and social platforms revolved around one key question: what does the Hyperliquid team plan to do with the tokens it has been buying with those fees?

Several scenarios were widely debated:

• pump the price through continuous buybacks and later sell quietly into the market;
• distribute the accumulated tokens as grants to friendly validators in order to push out independent ones (only the top 24 validators by stake actually participate in validation, so a large concentration of tokens in one place was seen as a real governance risk);
• simply hold the tokens to gain voting dominance once HYPE becomes a full-fledged governance token.

For a full year, the team remained silent. And now it turns out that they never had the ability to control those tokens. Why keep this hidden for so long?

Today's announcement changes Hyperliquid's entire tokenomics. In practice, it means that as long as anyone pays trading fees on the exchange, HYPE tokens will be bought and destroyed. That leads to an interesting implication: HYPE can be offered at almost any price, and sooner or later the system will be forced to buy it back. Since the total supply of HYPE is capped, once all sell orders at lower prices are absorbed, the price must eventually reach that level - no matter how unrealistic it may seem today.

Of course, there are risks:

• traders may leave the exchange, reducing fee revenue;
• the fee-to-buyback program could be canceled.

Still, after today's announcement, HYPE has clearly become a more attractive and promising asset.

And as a reminder: you can swap any cryptocurrency for HYPE with no limits and no registration at rabbit.io.