According to Forbes, HYPE reached a record high in May, with institutional fund inflows attributed to ETFs, but the true driver comes from the protocol buyback mechanism: approximately 99% of trading fees are invested in the aid fund for continuous repurchases, with cumulative buybacks far exceeding those of ETFs. Buybacks have decreased by about 40% in the past two quarters, and during market downturns, buyback intensity will weaken, making holders more vulnerable. Buying HYPE is essentially a bet on the growth of trading volume in perpetual contracts on a single exchange, rather than broad confidence in decentralized finance.

DeepFlowTech

2026-05-24 00:57:14

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Deep Tide TechFlow News: On May 24, according to Forbes, Hyperliquid’s native token HYPE hit an all-time high of over $62 on May 21. The market generally attributes this to institutional capital inflows driven by the listing of the first U.S. spot ETFs, but analysis suggests that the true driver of the price is the protocol’s built-in continuous buyback mechanism.

Hyperliquid injects about 99% of trading fees into the “Assistance Fund,” which is used to continuously buy HYPE on the open market. Since launch, the protocol has generated cumulative revenue of more than $1.16 billion, nearly all of which has been used for buybacks. By comparison, the ETF’s first week attracted only tens of millions of dollars—an order of magnitude difference in scale.

However, this mechanism carries an obvious pro-cyclical risk. Protocol data shows that the quarterly buyback volume has fallen from $316.8 million in Q3 2025 to $192.3 million in Q1 2026, dropping by about 40% across two quarters. Once the crypto market enters a down cycle and trading volume declines, the buyback support will weaken accordingly—precisely when token holders need buy pressure the most.

The analysis argues that buying HYPE is essentially a bet on whether the trading volume of perpetual contracts on a single exchange can continue to grow, rather than a broad bet on the overall outlook for decentralized finance.

HYPE15.11%

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