The native token of Hyperliquid, known as HYPE, is scheduled to begin its distribution to team members starting on November 29th. This marks a significant event for the cryptocurrency.
This distribution signals the commencement of a two-year vesting schedule. Analysts predict this could exert considerable downward pressure on the market price of the HYPE token.
The anticipated release will inject approximately $500 million worth of tokens into the market each month. Over the complete two-year period, this amounts to a substantial $11.9 billion.
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An analysis from Maelstrom, a fund spearheaded by Arthur Hayes, a BitMEX co-founder, characterizes this event as a critical juncture for the Hyperliquid project. You can find the analysis here.
Lukas Ruppert, a researcher at Maelstrom, suggests that current buyback mechanisms can only absorb approximately 17% of the unlocked tokens each month. This leaves a significant surplus, estimated at $410 million monthly, potentially entering the open market.
Ruppert emphasized the inherent temptation for developers to sell their tokens, given the immediate financial benefit. He pointed out the ease with which these tokens can be converted to personal gain once unlocked: “it’s only one click away.”
While Hyperliquid possesses a cash reserve of $305 million that could be deployed for token buybacks, Maelstrom argues that this will be insufficient to counterbalance the massive upcoming supply.
Ruppert also mentioned the growth of digital asset treasuries (DATs) like Sonnet, but anticipates they will not be able to fully mitigate the impact of these token unlocks.
In related news, Consensys founder Joseph Lubin recently addressed concerns among LINEA token holders following a recent 20% price decrease. To find out what he said, read the complete article.