HYPE Token Faces 45% Supply Cut Proposal Amid ASTER's Market Surge
A proposal is circulating within the Hyperliquid community to reduce the supply of its native token, HYPE, by 45%. This initiative, spearheaded by DBA Asset Management and crypto researcher Hasu, aims to address perceived market undervaluation and boost investor appeal. The proposal arrives as rival decentralized exchange, ASTER, experiences significant growth and market traction.
DBA's Proposal: A Deep Dive
DBA Asset Management, a significant holder of HYPE, is advocating for a substantial reduction in the token's supply. The proposed plan includes revoking unissued tokens allocated for future emissions and community rewards, as well as burning assets held in Hyperliquid's Assistance Fund. Furthermore, the proposal seeks to eliminate the existing 1 billion supply cap.
If approved by Hyperliquid's governance, this action would eliminate 421 million HYPE tokens earmarked for community rewards and an additional 21 million from the Assistance Fund. Jon Charbonneau, investment manager at DBA, argues that the market currently undervalues HYPE due to the fully diluted valuation metric, which considers unissued tokens.
Rationale Behind the Token Supply Reduction
DBA believes that by cutting these allocations, HYPE will become more attractive to both investors and stakers. This move would streamline HYPE tokenomics without limiting its future funding options.
“This change corrects the market’s misvaluation and preserves the protocol’s ability to fund initiatives,” said Jon Charbonneau.
Haseeb Qureshi, managing partner at Dragonfly, echoed this sentiment, describing the nearly 50% community allocation as an undefined "slush fund." He suggested that transparent allocation would significantly benefit the protocol.
Community Response: Mixed Reactions
The proposal has elicited diverse reactions within the Hyperliquid community. While some support the initiative, others express concern about its potential impact on growth. Critics argue that future emissions are a crucial tool for Hyperliquid's expansion and competitiveness.
Mister Todd, a crypto pundit, criticized the plan as "absolutely foolish and a disaster," suggesting that it could stifle growth. Concerns were also raised about the potential need for reserve tokens to hedge against fines or regulatory actions, but Charbonneau has stated that the proposed accounting changes would not reduce available reserves for such scenarios.
ASTER's Ascendancy: Challenging Hyperliquid's Dominance
While the HYPE supply cut proposal is debated, rival DEX ASTER has been gaining significant traction in the market. ASTER's growth is largely attributed to one of the largest DeFi airdrops to date, allocating 53.5% of its supply to the community. This strategy led to nearly 330,000 wallets joining the network within a single day, propelling its total value locked (TVL) past $1 billion.
Data from DefiLlama indicates that ASTER's TVL currently stands at $1.39 billion. Notably, ASTER has surpassed Hyperliquid in 24-hour DEX volume for three consecutive days, potentially positioning it as a significant contender in the decentralized exchange landscape.
HYPE Price Analysis: Key Levels to Watch
Currently trading around $48.78, HYPE is consolidating after a recent pullback from highs near $60. The token is currently testing resistance at its 20-day moving average of $52.38, with support established at $44.30. Technical indicators suggest early bearish divergence, and the Balance of Power reflects reduced bullish strength.
If HYPE manages to reclaim $52.38, a subsequent move back above $60 is possible. However, sustained trading below $44 could trigger a deeper correction towards $40. These levels will be critical in assessing the short-term trajectory of HYPE.
Looking Ahead: Impact of the Proposal
The potential 45% supply cut could significantly reshape market perceptions of HYPE. The new and streamlined tokenomics may attract new investors and strengthen the asset's staking incentives. However, the growing competition from ASTER will also likely influence Hyperliquid's strategic decisions. The protocol may need to adapt its token allocation and prioritize growth initiatives to maintain its market position.
| Metric | HYPE | ASTER |
|---|---|---|
| TVL | Not Specified (Lower than ASTER) | $1.39 Billion |
| Token Supply Reduction Proposal | 45% | N/A |
| Community Allocation | 50% (Debated) | 53.5% |
Technical trends currently indicate short-term volatility for HYPE, but governance decisions regarding the supply cut could significantly impact its long-term trajectory. The coming months will be crucial in determining the future of both HYPE and Hyperliquid.
