HYPE Token Supply Faces 45% Cut Amid ASTER Market Surge

New proposal seeks 45% cut to HYPE supply by burning future emissions and rewards as rival ASTER gains market traction.

DBA Asset Management wants to slash HYPE’s token supply by 45%. The firm holds a major position in Hyperliquid’s native token and is co-authoring the plan with crypto researcher Hasu.

The proposal would cancel unissued tokens for future emissions and community rewards. It also seeks to burn assets in Hyperliquid’s Assistance Fund and remove the 1 billion supply cap.

If approved, this plan would cut 421 million HYPE from future rewards and 21 million from the Assistance Fund.

Why DBA Supports The Cut

Jon Charbonneau, investment manager at DBA, said that the move would make HYPE more attractive to investors and stakers. He explained that pre-allocated tokens tend to distort market perception.

“This change corrects the market’s misvaluation and preserves the protocol’s ability to fund initiatives,” he said. 

By revoking unissued allocations, DBA is aiming to streamline HYPE tokenomics without limiting its future funding options.

Supporters like Dragonfly managing partner Haseeb Qureshi supported this view. He called the nearly 50% community allocation an “amorphous slush fund” and argued that transparent allocation would benefit the protocol.

Community Divided on the Proposal

The proposal has drawn mixed reactions, though. Critics argue that future emissions are Hyperliquid’s strongest growth tool.

Crypto pundit Mister Todd, for example, called the plan “absolutely foolish and a disaster.” 

Others noted that keeping tokens available helps hedge against fines or regulatory actions. Charbonneau responded that the accounting changes do not reduce available reserves in such scenarios.

HYPE recently reached an all-time high of $59.30 but fell back to $46.08 as selling pressure mounted. 

Notably, investment firms, including Arthur Hayes-led Maelstrom Fund, sold their holdings over the upcoming token unlocks of nearly $12 billion over 24 months.

ASTER Steals the Spotlight

While HYPE continues to trudge through mud, its rival ASTER has created market buzz. The decentralised exchange conducted one of the largest DeFi airdrops and allocated 53.5% of its supply to the community.

Nearly 330,000 wallets joined ASTER within a day, and helped its total value locked (TVL) break above $1 billion. 

DefiLlama data shows that ASTER’s TVL currently sits at $1.39 billion, beating Hyperliquid in 24-hour DEX volume for three consecutive days.

HYPE Price Analysis

HYPE is consolidating after a sharp pullback earlier in the week. The asset trades at $48.78 and is facing resistance near the 20-day moving average of $52.38. 

Interestingly, support lies at $44.30.

Technical indicators indicate some early bearish divergence, and if HYPE reclaims $52.38, a move back above $60 could follow. 

If the bears continue to hold prices below $44, this could trigger a deeper correction toward $40.

Outlook for HYPE Token Supply

If approved, the 45% supply cut could reshape HYPE’s market perception. The new and streamlined tokenomics might attract new investors and strengthen the asset’s staking incentives.

Competition from ASTER will also likely affect Hyperliquid’s strategies. The protocol may need to adapt token allocation and more growth initiatives to maintain its market position.

Technical trends are indicating volatility in the short term, but governance decisions could affect HYPE’s trajectory in the next few months.