Should Hyperliquid burn 31M HYPE from its assistance fund?

There's been a lot of buzz around the proposal to burn 31 million HYPE tokens currently sitting in Hyperliquid’s assistance fund.

Unsurprisingly, HYPE holders are cheering the idea. Token burns often drive prices higher. Just last week, after KILO announced it would burn 0.86% of its supply, the token price shot up 70%. Now imagine what a 3.1% burn could mean for HYPE!

Many are drawing comparisons with Binance, which runs quarterly BNB burns.

But here’s the catch: Binance funds its burns with actual profits. Hyperliquid doesn’t really have profits. Instead, 99% of all trading fees paid by users go straight into buying HYPE for the assistance fund (with the remaining 1% covering market-making costs).

That means traders pay fees on Hyperliquid, but instead of going to the team running the exchange, those fees end up benefiting HYPE holders who provide nothing in return.

Right now, the team at least has access to the tokens bought with those fees. But if those tokens are burned?

• Okay, the team won’t be left empty-handed - they hold HYPE outside the assistance fund - but they’d get zero from trading fees.
• And traders? What did they really pay fees for, if everything their money bought just gets destroyed?

The truth is, very few people fully understand HYPE’s tokenomics. It’s a setup unlike anything else in crypto.

Want to take part in it? Head over to rabbit.io - swap any crypto into HYPE at the best rates, no account needed.