HYPE surged to a new high of 62 USD, not because of ETF, but because Hyperliquid used almost all of its profits to buy back its own tokens.

Written by: Zennon Kapron, Forbes

Translated by: AididiaoJP, Foresight News

Hyperliquid uses almost all trading fees directly to buy back its own HYPE tokens. This built-in mechanism has a price-driving effect that far exceeds the recently launched spot ETFs.

On May 21, the price of HYPE broke through 62 USD, reaching an all-time high. The explanation from the market was as usual: institutional funds have arrived. The first batch of Hyperliquid spot ETFs in the United States just began trading a few days ago, and HYPE's fully diluted valuation once surpassed Solana, leading financial media to tell the story of "Wall Street finally discovering decentralized derivative exchanges."

However, this story is not complete and could even mislead us in understanding this surge. The main reason for HYPE's real increase is that Hyperliquid uses almost all its earned income to buy back its own tokens. This buyback mechanism is written into the protocol, operates continuously and automatically, and has almost nothing to do with whether outside investors are optimistic.

The real buyer is the Assistance Fund

Hyperliquid operates a mechanism called the "Assistance Fund." According to DefiLlama data, 99% of trading fees from the perpetual contract and spot markets flow into this fund, which directly buys HYPE tokens on the open market. No board can vote to suspend it; the buyback is the default behavior of the protocol's revenue model, executed in every block and under every market condition.

The amount is large enough to independently drive the price. Since its launch, Hyperliquid has accumulated over 1.16 billion USD in revenue, almost all of which has been used to acquire its own tokens. In the third quarter of 2025 alone, the protocol bought back 316.76 million USD worth of HYPE. Few public companies can return capital to shareholders at such intensity, and those companies still need to make deliberate decisions each quarter. Hyperliquid has eliminated this decision—buybacks will happen.

There are two ongoing buy orders supporting it

The protocol itself is not the only programmatic buyer. Hyperliquid Strategies (listed on Nasdaq through a reverse merger, ticker PURR) was established solely to accumulate and hold HYPE, currently holding about 20 million tokens. The company recorded a net profit of 152.5 million USD last quarter, almost entirely from unrealized gains on its HYPE holdings. A "treasury company" whose income fluctuates with token prices constitutes a second ongoing buy order on the market level, and the higher the price, the louder this buy order becomes.

The third flow of funds comes from the stablecoin layer. When USDC became Hyperliquid's official quote asset, the protocol returned up to 90% of the earnings from USDC reserves held on the platform for buybacks and ecosystem incentives. There are always billions of USDC on the platform, and the interest generated from these balances creates another nine-digit buy order annually. Three pipelines are all directed toward the same token.

The underlying business is indeed solid

If the underlying business were not strong, buybacks would just be a hollow cycle, so the fundamentals are worth serious consideration. Hyperliquid has already occupied a dominant share in the field of on-chain perpetual contract trading, a sector that is rapidly growing as traders seek venues beyond centralized exchanges. Its cumulative perpetual trading volume has reached trillions of USD, and the fees flowing into the Assistance Fund come from real trading activities.

This differentiates Hyperliquid from many previous crypto projects—those projects relied on incentivizing users with their inflationary tokens to create false activity. Hyperliquid can earn nearly 1 billion USD from real customer activity each year and return this money to token holders, which is more honest than most projects in the industry. It is important to note that Hyperliquid the company is not weak; rather, the company and the token are two different entities, while the market currently prices the token as if they were entirely the same.

What contribution does the ETF actually make?

Comparing the buyback machine and media headlines. In May, Bitwise and others launched the first American HYPE spot ETFs, attracting tens of millions of USD in the first week. This is indeed real institutional money and a credibility endorsement for the young asset, which is commendable.

But the scale is relatively limited. The protocol buys back hundreds of millions each quarter, while ETF inflows are only in the tens of millions. The ETF launch became a headline because it fits the familiar narrative of "Wall Street certifying crypto assets." But the real price determinant is the Assistance Fund, which continues to operate stably even without ETF news weeks.

The behavior patterns of the two differ, which is key. ETF demand reflects external investors' choices to sell at any time; buybacks are the accounting result of perpetual contract trading. As long as trading volume is maintained, even if all ETF holders lose interest overnight, buybacks will continue at full speed.

The actual significance of buybacks for holders

The term "buyback" carries assumptions from the stock market that do not fully apply to tokens. When a public company buys back stock, it reduces the circulating shares with cash, allowing shareholders to sell and take dollars.

However, the Assistance Fund does not return anything. It converts protocol revenue into HYPE, held by the protocol, thereby reducing circulation and supporting the price. HYPE holders cannot redeem or request shares from the fund; the value created by the fund is only reflected through one channel—the market price of the token, which is itself supported by continuous buy orders. Simply put, the price of the asset held by HYPE holders is supported by a continuous buy order, and the scale of that buy order is determined by trading volume each quarter.

The flywheel rotates in both directions (risk)

This dependency is precisely the structural risk. Buybacks driven by trading fees can never exceed the limits allowed by trading volume, while crypto trading volume is highly cyclical. The protocol's own data has shown this effect: quarterly buyback amounts have decreased from 316.76 million USD in Q3 2025 to 255.05 million USD in Q4, and then to 192.25 million USD in Q1 2026. While HYPE has reached new highs, this supporting buy order has shrunk by about 40%.

The price and the engine are moving in reverse, which is precisely the part overlooked by the "institutional funds entering" narrative. During a real crypto bear market, perpetual contract trading volume will shrink significantly, leading to reduced buybacks, and support will vanish exactly when holders need buy orders the most. This mechanism amplifies profits during price increases and withdraws support during declines. Currently, only the first half of this has been fully validated in scale.

The comparison with Solana actually overestimates HYPE

The claim that HYPE "surpassed Solana" also needs to be examined. Surpassing occurs on a fully diluted valuation basis, accounting for all future tokens that will exist. However, in terms of actual circulating market value, HYPE still remains far below Solana, as a large supply of HYPE has yet to enter the market.

The unlock schedule is crucial for buybacks. As the locked supply gradually enters circulation, the Assistance Fund must absorb increasingly more potential selling pressure to maintain the price from falling. The flywheel must continue to accelerate in the face of an ever-growing circulating supply. If a slowdown in trading volume occurs simultaneously with an increase in circulating supply, the pressure will compound.

How to price a "self-buying" token?

Hyperliquid remains one of the most profitable projects in the crypto space, with revenue levels that most Layer 1 public chains find difficult to reach, and using that revenue for buybacks is a reasonable way to reward holders. Arthur Hayes set a target of 150 USD in August, which is internally consistent from a mechanistic perspective. Technical analysts believe the token is overbought, which also aligns with the mechanistic logic.

The most honest statement is: the bullish and bearish reasons for HYPE are essentially the same thing. Its price is mechanically linked to Hyperliquid's trading volume—trading volume generates buybacks, and buybacks support the price. Investors buying HYPE at historical highs are essentially making a leveraged bet on a single variable: whether the exchange's perpetual contract trading volume can continue to rise.

This is a much narrower bet compared to betting on the entire DeFi space, and much narrower than betting on a general-purpose public chain like Solana. The historical high price chart appears as if the market has reached a conclusion, but for this token, what the market sees is largely its own reflection.