Ever wondered if that flashy fully diluted valuation (FDV) number for your favorite crypto project is telling the whole story? In a recent clip from the Unchained podcast, hosted by Laura Shin, Jon Charbonneau, co-founder and general partner at DBA, breaks down why Hyperliquid's FDV might be misleading investors by a whopping $20 billion. Let's unpack this and see what it means for the HYPE token and the broader meme token ecosystem.

What Is Hyperliquid and Its HYPE Token?

Hyperliquid is a decentralized perpetual futures exchange built on its own Layer 1 blockchain, designed for high-speed trading and liquidity. Its native token, HYPE, powers the ecosystem, often drawing attention in the meme token community due to its catchy name and volatile nature. While not a pure meme token like Dogecoin or PEPE, HYPE has garnered a cult following thanks to Hyperliquid's innovative tech and community-driven hype.

In the podcast episode (check it out here), Charbonneau argues that the standard way we value tokens like HYPE is flawed, especially when relying on FDV.

Breaking Down FDV: Why It's Often Overstated

FDV, or fully diluted valuation, is calculated by multiplying the current token price by the total supply—including all tokens that could ever exist, even if they're not yet issued or circulating. It's like valuing a company based on every share it could potentially authorize, not just what's out there.

Charbonneau points out that many investors use FDV as a headline metric, but it often inflates the perceived value. For Hyperliquid, the FDV sits around $50 billion, but he suggests the more relevant figure—factoring in only outstanding shares—is closer to $30 billion. That's a $20 billion difference!

He compares it to equity markets: "If you looked at equivalence to those from an equity market cap, those would never be counted in the number that you're actually using for valuing the protocol." In crypto, though, people slap on that big FDV number, which can scare off investors or create unrealistic expectations.

This issue hits meme tokens hard. Many launch with massive total supplies but tiny initial circulations, leading to sky-high FDVs that don't reflect real market dynamics. Think of it as hype without the substance—pun intended.

The Proposal: Slashing HYPE Supply by 45%

To fix this, Charbonneau and his team at DBA, along with researcher Hasu, propose burning about 45% of HYPE's total supply. This would involve destroying unissued tokens, effectively reducing the max supply and bringing the FDV down to a more realistic level, potentially around $16 billion when excluding locked tokens.

Why burn? It addresses the "high FDV problem" head-on, making the token scarcer and potentially more attractive to investors. As Charbonneau notes in related discussions, this could align Hyperliquid's valuation more closely with its actual adoption and revenue potential, especially with upcoming features like USDH (a stablecoin that could boost earnings).

For meme token enthusiasts, this is a game-changer. Burns are a common mechanic in meme projects to drive up value through scarcity—remember SHIB's massive burns? If approved, this could set a precedent for other tokens struggling with inflated valuations.

Is This a Buying Opportunity for HYPE?

The big question from the tweet: Does this undervaluation mean HYPE is a buy? Charbonneau seems to think the current metrics make it look pricier than it is, potentially creating an entry point for savvy investors. But as always in crypto, do your own research—volatility is the name of the game.

Hyperliquid's strong fundamentals, like its focus on DeFi trading and institutional appeal, could make it resilient. If the burn proposal passes, it might spark a rally, especially in a bull market.

Lessons for Meme Token Investors

This discussion shines a light on why FDV isn't always the best metric for meme tokens. Instead, look at circulating supply, tokenomics, and real-world utility. Tools like CoinMarketCap or DefiLlama can help dig deeper.

In the wild world of meme tokens, understanding these nuances can separate the winners from the rugs. Whether you're holding HYPE or eyeing the next big meme, keep an eye on how projects handle supply and valuation— it could be the key to unlocking real value.

For the full scoop, listen to the Unchained podcast episode featuring Jon Charbonneau. What do you think—is Hyperliquid undervalued? Drop your thoughts in the comments!