Holding shares can earn dividends? Hyperliquid is bringing the rules of traditional stock markets on-chain

Author｜Odaily Planet DailyAzuma

On August 12, Beijing time, Jeff Yan, the founder of Hyperliquid, announced an update in the official Discord channel. The original statement was too technical, causing many people to overlook or underestimate the significance of this update.

Literal Translation

Below is a direct translation of Jeff Yan's original statement.

• According to feedback from Builders, HIP-1 will add the following function controlled by the token deployer: scaleWei { token, totalWei, referenceToken, systemAddress }.
• This operation will automatically transfer the token's totalWei from systemAddress to users based on the balance of referenceToken they hold, proportionally. The calculation will round down and will not include the systemAddress itself. For example, when token == referenceToken, this function can be used for redenomination.
• There are two possibilities for systemAddress: Core → EVM's system address; or a Treasury address specified by the deployer that can provide signatures. It is important to note that EVM itself does not have this atomic functionality. Therefore, if the relevant token exists in the EVM environment, the corresponding smart contract may need to add custom logic to synchronize this operation with the token balance on EVM.
• When token and referenceToken are the same token: all open orders will be canceled, and then recreated according to the actual redenomination ratio, rounding down according to the precision requirement of szDecimals; totalWei can be negative. This allows for reverse redenomination.
• Feedback is welcome to ensure that this function can meet practical usage needs as broadly as possible.

Clearly, without a certain understanding of the concept of smart contracts, it is difficult to grasp what this update from Hyperliquid really means.

Simplified Interpretation

In simple terms, Hyperliquid is adding a previously uncommon capability to HIP-1 ------ to directly make bulk, programmatic adjustments to user assets on the "balance layer" of HyperCore.

The most important aspect here is not the function name scaleWei and its related parameters, but what they can actually do.

Assuming there is a token A on Hyperliquid, now Alice holds 100, Bob holds 50, and Charlie holds 10. If a certain address has 1600 tokens B and uses A as the referenceToken, then the system can automatically distribute these 1600 B based on each person's proportion of A held.

The distribution will be as follows:

• Alice holds 62.5% of A and receives 1000 B;
• Bob holds 31.25% and receives 500 B;
• Charlie holds 6.25% and receives 100 B.

Users do not need to click Claim or call the smart contract one by one; HyperCore can directly modify account balances according to established rules.

If token == referenceToken, then "redenomination" will be executed, and the changes will be even more intuitive.

For example, if the original holding state of a stock token is that Alice holds 100 shares, Bob holds 50 shares, and Charlie holds 10 shares, and now a 1:10 stock split occurs, the system can directly adjust the balances.

The adjusted holding state will be:

• Alice holds 1000 shares;
• Bob holds 500 shares;
• Charlie holds 100 shares.

Everyone's holding ratio remains unchanged; only the unit of valuation has changed. The reverse is also true.

Hyperliquid's update also specifically considers the order issue in trading. If an asset undergoes a 1:10 stock split, the 100 shares sell order that a user previously placed cannot remain unchanged; otherwise, the number of orders after the split will not match the new holding system. Therefore, the system will cancel the original orders and recreate them according to the new ratio, processing the quantity according to szDecimals for precision. In other words, this essentially allows for the revaluation of balances, orders, and other trading statuses simultaneously.

Understanding the update logic, what is the use of this "programmable capability at the balance level"?

Application Scenarios

Currently, the content announced by Jeff Yan mainly describes the underlying capabilities of scaleWei, but around this capability, we can already glimpse several clear application directions related to stock tokens.

Scenario 1: Dividends

Dividends are one of the most basic rights of traditional stocks. In the traditional brokerage system, this is a standard corporate action; however, in a typical EVM model, if similar operations are to be performed, it usually requires recording qualifying addresses through smart contracts and then having users claim them actively, or having the project team distribute them one by one.

ScaleWei offers another possibility ------ directly distributing dividend assets to users based on the stock token balances on HyperCore according to their holding ratios. Suppose a listed company's stock token appears on Hyperliquid, and the company decides to distribute $1 per share in dividends ------ Alice holds 100 shares, Bob holds 50 shares, and Charlie holds 10 shares; the system can directly allocate the dividend assets to their respective accounts according to their holding ratios, without requiring users to manually claim or the project team to call contracts one by one; HyperCore itself can complete this bulk transfer.

Scenario 2: Stock Splits and Consolidations

This is actually a scenario that has already been clearly addressed in this update. When the token and referenceToken are the same asset, scaleWei can uniformly adjust the balances of all holders proportionally.

Therefore, in the future, if a HIP-1 asset needs to undergo a 1:10 stock split, a 10:1 consolidation, or even adjust the minimum trading unit, it can be executed directly, and the system will simultaneously cancel and recreate unfilled orders. For trading systems that genuinely want to carry stocks and ETFs, such "corporate actions" are standard features.

Scenario 3: Rebasing

A similar mechanism can also be used for Rebase. Simply put, it refers to when the total amount or unit of the asset itself undergoes adjustments (especially common during pre-market stock token conversions, where the number of shares will be adjusted accordingly), but the relative holding ratios among users remain unchanged.

Previously, such operations often relied on the logic of the token contract itself; in the future, it can become a native capability of HyperCore.

Scenario 4: Airdrops

Another more intuitive scenario is airdrops. The referenceToken does not have to equal the token being distributed, so theoretically, assets B can be allocated according to the holding ratio of A.

For example, if a project decides to distribute another token to holders of a certain HIP-1 asset, the system can directly read the user's A balance on HyperCore and then allocate B from a specified Treasury address according to the ratio.

This means that at least within HyperCore, some traditional "claiming airdrop" actions may be further simplified to the system directly completing balance distribution.

Filling the Gap of "Corporate Actions" in Tokenized Stocks

It is important to emphasize that the update announced by Jeff Yan currently focuses only on underlying functionality and does not mean that Hyperliquid has announced plans to distribute dividends on stock tokens on the platform. However, from an infrastructure perspective, the technical path for the capability of "allocating assets to accounts according to holding ratios" required by the above application scenarios is already in place.

Considering the potential application scenarios, the real significance of Hyperliquid's update lies in its potential to fill the gap in the "corporate action" capabilities of on-chain assets.

In the past few years, industry discussions about tokenized stocks often focused on ------ "Can stocks be put on-chain?" But if we really want to move stocks on-chain, the issues are far more than just this. After the issuance of stocks, a series of corporate actions such as dividends, stock splits, consolidations, rights issues, and asset distributions will continue to occur.

Therefore, a truly complete on-chain stock infrastructure not only needs to be able to "trade stocks" but also needs to handle changes in asset states beyond these transactions, which is precisely what Hyperliquid's update begins to touch upon.

From this perspective, scaleWei seems to be filling a piece of the infrastructure puzzle for the next phase of Hyperliquid ------ allowing on-chain financial assets to not only be "tradable" but also to undergo various corporate actions just like financial assets in the real world.