Hyperliquid Unlocks

Unlock Data

• Current circ supply - 270.77m HYPE
• Starting on Nov 29th, 237.84m in HYPE will begin vesting linearly over 24 months. At current prices ($42), that's $10.2bn - around $425m notional hitting the market every month.
• Hyperliquid is currently doing buybacks using 93% of the fees generated by the protocol. Average monthly fees (based on previous 4 months) are $85m/month meaning $79.5m goes towards buybacks. Buybacks can therefore only absorb ~18.6% of the theoretical supply overhang (if it all were to be dumped).

Proposal to Reduce HYPE Total Supply by 45%

We propose the following changes to Hyperliquid's economic model: Future Emissions & Community Rewards (FECR) - Revoke authorization for all unminted HYPE currently allocated to FECR. Assistance Fund (AF) - Burn all HYPE currently held in the AF. Burn all HYPE acquired by the AF on an ongoing basis. Max Supply - Remove the max supply cap of 1bn HYPE. Ongoing token issuance (e.g., for staking emissions or community rewards) would now increase the total supply. The result is an immediate >45% reduction in HYPE's total supply.

• In the HYPE token model, future community rewards comprise approximately 38.89% of the initial distribution, a potential source of dilution of greatest concern to the market. The proposal directly eliminates the long-term unlocked supply ceiling.
• AF (Assistance/Boosting Fund) changed to "buy back and burn": AF used to use its income to buy back HYPE in the secondary market and hold it; according to the proposal, all HYPE already held and subsequently purchased will be burned, changing from "inventory/treasury" to permanent destruction, continuously forming buying pressure but no longer accumulating chips.
• Cancel the 1 billion cap + continuous issuance: In the future, staking rewards, community incentives, etc. will be used through continuous issuance according to rules (inflation track), rather than using a huge reserved pool.

Next, we'll see how the team and Jeff respond. At least the second point is fairly easy to implement. If there's a substantive response to offset the negative impact of the aforementioned unlocks on November 29, 2025, HYPE's price is expected to stabilize and rise.

To what extent is Aster an existential threat to Hyperliquid?

• Fee models are similar, with Aster's basic rate being slightly lower
  • Aster maker 0.01% / taker 0.035%, Hyperliquid maker 0.01% / taker 0.045%
  • Hyperliquid can use HYPE staking to reduce fees (up to 40%), and Aster offers VIP level discounts.
• Key difference is transparency - Aster has hidden order feature allowing users to completely hide their limit order from the order book. Jeff would argue that this limits decentralization/transparency.
• With Binance/CZ's backing, liquidity will be deep and features such as grid trading, hedging, as well as a unified account (powerful tool for improving fund utilization) that Binance offers (and Hyperliquid lacks) will likely be implemented on Aster.
• Hyperliquid has its own L1 comprised of Hyperliquid core (on-chain order book matching engine) and HyperEVM (EVM-compatible smart contract layer). Aster is aiming to launch its own L1, but is yet to do so.
• Ultimately, Hyperliquid's real transaction volume and OI currently far exceed Aster's, and its community and ecosystem are also currently ahead. Hyperliquid also has HIP-3 (bringing entire finance stack onto Hyperliquid e.g deploying perp markets for major US equities, perps for private/pre-ipo companies etc.) and HIP-4 (create binary markets - prediction markets - directly on Hyperliquid order books), expanding the ecosystem further.
• Hyperliquid therefore leads Aster by a generation e.g like the lead of a fifth-generation aircraft over a fourth-generation aircraft. It remains to be seen whether the Aster team will be able to compete with Hyperliquid's stellar team in terms of product - ultimately product will win.

It remains to be seen how sticky Hyperliquid's volume actually is.

Potential Outcomes

• Bearish Outcome - Team dumps all/most of its allocation every month. Supply overhang proves too large for the market to absorb. Hype experiences significant drawdown. Competitors like Aster and Lighter gain market share.
• Neutral to Bullish Outcome - Unlocks prove to be nothing burger. Hype continues as #1 perp DEX. Volume aggregates around Hyperliquid over competitors.

Second Order Effects

• Given Jeff and Hyperliquid team's dedication to the performance of HYPE token (93% of revenue goes towards HYPE buybacks), it is in all of their interests not to dump their allocations (which would destroy HYPE price). This would be out of character and Jeff understands that token price = marketing.
• CZ understands that volume is moving from CEXs to DEXs as explained here. Aster is CZ's next Binance -> CZ is perhaps the most powerful person in crypto and famous for using dirty tricks/reg arb to defeat competitors.
• Market sentiment around Aster is positive (maybe because numbers go up) which may have a reflexive impact on HYPE price in the short term.
• It may make sense to hedge some portion of HYPE position, as in my view it is more likely that, due to the growing competitive nature of the market, as well as the unlock narrative, HYPE will stay flat or decline in price. A price increase seems the least likely scenario of the three. With that being said, given the recent price action, it could be argued that these risks have been priced in, especially after Aster TGE.