The Hyperliquid Foundation is holding a validator poll to burn coins accumulated in the Assistance Fund, as the token unlock could exacerbate the already declining prices.
The Hyperliquid Foundation is considering burning the accumulated coins in its possession, as the token has crashed to a 6-month low. As such, the foundation is running a poll to get consent from the validators to decide on this regard.
“For context, the Assistance Fund converts trading fees to HYPE in a fully automated manner as part of the L1 execution. The Assistance Fund uses the system address 0xfefefefefefefefefefefefefefefefefefefefe. Similar to the zero address, the Assistance Fund system address has never had a private key with control over its funds. Funds are mathematically irretrievable without a hard fork.”
If most validators agree to burn the fund’s coins, about 37 million (13% of the supply) will be cut. Projects use a token burn mechanism to reduce the supply, leading to a subsequent increase in demand and price.
The foundation seems to be trying to cushion the impact that the token unlock scheduled for today might have on the prices. HYPE’s token unlock scheduled for today will unlock more than 200K HYPE coins into the market, which are worth about $5 million. When such a large supply is released into the market, the demand will drop, and so will the prices. However, a token burn could mitigate this impact.
HYPE has been crashing since mid-September, from $56 to as low as $23 within the last three months. Although the price is crashing, it is doing so within a falling wedge pattern, which is considered bullish. At completion, this pattern breaks out to the upside.
The technical indicator, the Moving Average Convergence and Divergence (MACD) line, is moving downwards. It has fallen below the MACD-SMA line, stating that HYPE is below par. Once the coin completes the pattern, it will rebound by the height of the widest part of the wedge, which eventually will take the coin above the $40 level.
