Hyperliquid uses USDC reserve yield to buy back HYPE

Starting 26 August, Hyperliquid will use proceeds from USDC reserves to buy back and permanently burn its own HYPE token. The mechanism is called AQAv2 and was developed in collaboration with Circle and Coinbase. The first actual payout to the Assistance Fund is scheduled for 3 October, after which the fund will go to the market to buy HYPE and then burn those tokens.

Hyperliquid is available at OKX and Bybit.

In brief:

• Hyperliquid activates AQAv2, which automatically uses proceeds from USDC reserves to buy back and burn HYPE.
• About 90% of the reserve proceeds go to the Assistance Fund, which is filled every 30 days.
• Market estimates suggest annual proceeds of $135 to $160 million, depending on USDC volume and yield rate.

How AQAv2 works

The AQAv2 framework stipulates that stablecoin providers which make their coin available on Hyperliquid share a large portion of the reserve proceeds with the protocol. For USDC, Circle manages the technical side and Coinbase is responsible for managing the reserves. As Digital Asset reports, USDC balances on Hyperliquid are split in a ratio of 1 to 9 between a connector contract and a treasury address, a process that runs automatically per block on HyperEVM via system transactions.

Of the generated reserve proceeds, approximately 90% goes to Hyperliquid’s Assistance Fund. This fund receives a new deposit every 30 days and uses the money to buy HYPE through the market. The purchased tokens are then permanently burned, removing them from both the circulating supply and the total supply.

First payout on 3 October

Although the accumulation of reserve proceeds begins on 26 August, there is a ramp-up period. The first payout to the Assistance Fund and the corresponding HYPE buy-back are only scheduled for 3 October. From that date, the fund will carry out its first market purchases and burns.

Market estimates, based on current USDC volume on Hyperliquid and prevailing yield rates, point to an annual amount of $135 to $160 million that could become available for HYPE purchases. These are explicitly external estimates and not official forecasts from Hyperliquid itself. The actual size depends on how much USDC is present on the platform and what the reserve proceeds amount to at that time.

As more USDC is deployed on Hyperliquid, the proceeds also increase and more can be spent on buying back and burning HYPE. Earlier, HyperEVM set a daily record with $500.000 in revenue, showing that activity on the platform is steadily increasing.