Hyperliquid has established an aid fund within its ecosystem, designed to use transaction fee income generated by the protocol to continuously repurchase HYPE in the open market: as of October 13, the fund has cumulatively purchased over 48 million HYPE, with a total cost of around 1.365 billion USD. At the time's price levels, the market value of this holding is approximately 3.953 billion USD, leading to a paper profit of about 2.588 billion USD. This means that the protocol's income has significantly concentrated in the fund's address via buybacks, creating a strong value return effect for early funding. This buyback path driven by protocol fees has been repeatedly reported by several industry media, but questions remain regarding the buyback limit, termination conditions, and subsequent disposal strategies, as well as the undisclosed proportion of the 48 million HYPE in terms of total supply or circulation. Whether such a large scale of holdings and paper profits will continue to strengthen the positive feedback loop of "protocol income—token price—fund assets," or whether it will amplify the sell pressure and price fluctuation risk from a single entity at some point in the future, will become the core divergence surrounding Hyperliquid's buyback model.
48 million tokens and 2.588 billion of paper profit
Breaking down the results of this round of buybacks, as of October 13, the aid fund has purchased over 48 million HYPE at a total cost of approximately 1.365 billion USD, while the market value of this holding during the same period is around 3.953 billion USD, leading to a market value to cost ratio close to 3:1. Based on current prices, the paper profit is approximately 3.953 billion minus 1.365 billion, equating to about 2.588 billion USD, indicating that the fund has achieved a substantial nominal profit that remains unconverted during this historical buyback period using income from protocol fees.
Crucially, these over 48 million tokens remain highly concentrated in the aid fund's account, rather than being dispersed among numerous trading participants. On one hand, the significant appreciation of asset holdings over invested costs makes it easier for external observers to view the fund's continuous buybacks as a form of implicit "floor" for price stabilization. The market's expectations for future fee incomes to continue translating into buy orders will also directly reflect in the perceived valuation of HYPE. On the other hand, since this portion of tokens and the 2.588 billion USD profit are highly concentrated in a single address, in the absence of publicly available buyback limits, termination conditions, and disposal paths, it inherently becomes an unavoidable core uncertainty in HYPE's circulation structure and price expectations.
Hyperliquid's buyback and dividend choice
In terms of approach, Hyperliquid has chosen a relatively straightforward closed loop: transaction fee income generated by the protocol is directly injected into the aid fund, which then uses the fund to purchase HYPE in the open market, converting operating cash flow into token assets, and gradually concentrating secondary market circulation chips into the fund's address. The over 1.365 billion USD cumulative protocol income has been used to buy over 48 million HYPE, essentially reinvesting all the "profits from business operations" back into its own tokens rather than keeping them off-chain or dispersing them for multiple purposes. This singular source and purpose design makes the transmission chain between fees and buy orders very direct, amplifying the market's expectation that "every transaction will ultimately translate into HYPE purchasing power."
Comparing horizontally with common practices in the industry, the characteristics of this approach become clearer: some protocols opt for "buyback and burn," reducing total supply to enhance each token's relative scarcity; others distribute the income proportionally to token holders, forming cash dividends or periodic income distributions; some projects prefer to keep income in the treasury for research and development, incentives, or acquisitions, leaning towards accumulating long-term ammunition. Hyperliquid's current model neither destroys the repurchased HYPE nor distributes fees in cash form, but rather allows the aid fund to continually increase its holdings: for token holders, the value return is more reflected in reduced secondary market selling pressure and potential price elevation rather than periodic liquid cash income. This essentially represents the protocol's operational success as an indirect mapping to tokens in a manner of "concentrated holdings and buyback support" rather than directly through conventional cash dividend channels.
How transaction fee income drives HYPE demand
Under Hyperliquid's current design, trading volume, transaction fee income, and HYPE demand are directly linked: the more active the trading activity, the more fees the protocol collects, and the larger the fund pool available for the aid fund, which subsequently expands the actual buyback scale in the open market. Since the source of buyback funds has been disclosed as income generated by transaction fees and is primarily executed through public purchases, it means that every unit of added trading volume will subsequently but consistently translate into passive buy pressure for HYPE, transmitting business growth from operating income to the token demand side.
This "buyback driven by fees" mechanism creates buy pressure continuously in the secondary market while concentrating the repurchased HYPE in the aid fund address, reducing the freely circulating tokens. As of October 13, the aid fund has cumulatively bought over 48 million HYPE at a total cost of approximately 1.365 billion USD. While the brief does not disclose the proportion of these tokens in the total or circulating supply, it can be established that the HYPE available for free trading in the market has relatively decreased. The existence of the fund as a single large buyer requires the market to incorporate this stable buy pressure into its pricing. When participants perceive the "protocol's continual buyback through fees" as a price up signal, it creates a cyclical reflexivity: increased trading volume raises fees and buyback size, buybacks enhance price performance, and a stronger price attracts more trading, until this cycle is interrupted by external shocks or changes in expectations.
The risks of concentrated holdings in the fund
Under cyclic expectations, a more intuitive reality is that as of October 13, the aid fund has accumulated over 48 million HYPE, with this concentration of holdings existing under a single fund address or related accounts, which represents a typical concentration risk. As market pricing increasingly relies on the premise of "continuous buybacks from the fund," the price and liquidity of HYPE are in fact tied to the same major holder. Once the behavior of this major holder changes, the price path may experience structural turning points rather than just simple short-term fluctuations.
Mechanically, as long as the fund maintains net buying, it is the largest marginal buyer; however, conversely, if in the future the fund adjusts its fee income from "continuous buyback" to "slowing down purchases" or even "opportunistically reducing holdings," the market's liquidity structure will be immediately reversed: the previously transaction relying on a single large buyer for support will face the greatest potential sell pressure source, and the elasticity of price to expectation changes will also be amplified. The issue is that there is currently no public information disclosing the proportion of these 48 million HYPE to total or circulating supply, and no verifiable buyback limits, clear termination conditions, or subsequent disposal rules. The official team also lacks a directly referable statement to define the operational boundaries of the fund in the future. In this context of information black box, it is difficult for the market to quantify the tail risks brought by concentrated holdings, making this uncertainty one of the core variables in HYPE's mid to long-term valuation structure.
When protocol buybacks become a price barometer
As a result, the aid fund's buybacks have been extremely successful on paper so far: after cumulatively purchasing over 48 million HYPE at a total cost of approximately 1.365 billion USD, the holding's market value is about 3.953 billion USD, creating about 2.588 billion USD of paper profit. This nearly exemplifies the closed loop of "protocol transaction fee income—> fund buyback—> token price and market value," reinforcing the narrative that "the protocol's actual income supports token value," which has been widely reported by multiple media, further amplifying this signal effect. The suspense lies in whether the fund can maintain a buyback scale that matches the growth rate of actual protocol fee income over the long term: once income slows or if the team's strategy shifts and buyback intensity declines, the current buyback expectations viewed as a "pricing cornerstone" may face market discounting, and the paper profit could also be reassessed. For participants attempting to determine HYPE's mid to long-term pricing logic, three variables deserve continued tracking: first, changes in transaction fees at the protocol level, representing the future "ammunition" available for buybacks; second, the aid fund address's buyback pace and individual scale in the public market, reflecting the team's marginal attitudes toward price and liquidity; third, changes in the concentration of the fund's holdings within the overall token structure, determining when the buyback narrative shifts from a "yield anchor" to a risk point for market repricing.
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