The Hidden Risk Behind Hyperliquid’s Bigger Buybacks

Today Hyperliquid announced that after the next network upgrade, 99% of the exchange’s revenue will be used to buy back HYPE tokens from the market — up from 97% before.

At first glance, that might sound like great news. But it’s not as positive as it seems. And the problem isn’t just that this reduces the yield for the HLP liquidity pool. I see a much bigger red flag.

Many people buy HYPE tokens because they believe demand is guaranteed as long as trading continues on Hyperliquid (trading → fees → token buybacks). That belief rests on the mantra “code is law.” The idea is that a portion of fees is automatically allocated to buybacks through the exchange’s smart contract.

But today we saw that the logic of that smart contract can be changed — all it takes is a network upgrade. So what’s to stop the team from lowering the revenue share for buybacks, or even removing buybacks entirely, once the original goals are met?

Yes, in theory such changes require validator consensus. And in the same announcement, the team also said the number of validators will be expanded. Sounds like changes will be harder to push through, right?

Not really. To become a validator, you still need the developers’ approval. Outsiders can’t just join in. Which means control of the blockchain remains firmly in the team’s hands — and any change they want can still go through.

And just a reminder: you can always swap HYPE for any other cryptocurrency at the best rates on rabbit.io.