Hyperliquid will also support stock dividends on-chain

Original by Odaily Planet Daily (@OdailyChina)

Author: Azuma (@azuma_eth)

On August 12, Beijing time, Hyperliquid founder Jeff Yan announced an update in the official Discord channel. Because the original wording was overly technical, many people overlooked or underestimated the significance of this announcement.

Literal Translation

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

• Based on Builder feedback, HIP-1 will add the following function controlled by token deployers: scaleWei { token, totalWei, referenceToken, systemAddress }.
• This operation automatically transfers the token's totalWei from systemAddress to users in proportion to their referenceToken balances. The calculation rounds down and excludes systemAddress itself. For example, when token == referenceToken, this function can be used for redenomination.
• systemAddress has two possibilities: the Core → EVM system address; or a Treasury address designated by the deployer that is capable of providing a signature. Note that the EVM itself does not have this atomic functionality. Therefore, if the relevant token also exists in the EVM environment, the corresponding smart contract may need custom logic to synchronously apply this operation to token balances on the EVM.
• When token and referenceToken are the same token: all open orders will be canceled and recreated according to the actual redenomination ratio, with quantities rounded down to the precision required by szDecimals; totalWei is allowed to be negative, enabling reverse redenomination.
• Feedback is welcome to ensure this feature can meet real-world needs as broadly as possible.

Clearly, without a basic understanding of smart contract concepts, it is difficult to grasp what this Hyperliquid update actually means.

Plain-Language Interpretation

In simple terms, Hyperliquid is adding a capability to HIP-1 that has rarely been seen before — the ability to batch-adjust and programmatically modify user assets directly at the "balance layer" of HyperCore.

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

Suppose there is a token A on Hyperliquid, and Alice holds 100, Bob holds 50, and Charlie holds 10. If an address holds 1,600 tokens of B and uses A as the referenceToken, the system can automatically distribute those 1,600 B tokens to users based on their proportional holdings of A.

The distribution would be:

• Alice holds 62.5% of A and receives 1,000 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 smart contracts one by one — HyperCore can directly modify account balances according to the established rules.

And when token == referenceToken, a "redenomination" is executed, and the change is even more intuitive.

For example, if a stock token originally has Alice holding 100 shares, Bob holding 50, and Charlie holding 10, and a 1:10 stock split is executed, the system can directly adjust the balances.

After the adjustment, the positions would be:

• Alice holds 1,000 shares;
• Bob holds 500 shares;
• Charlie holds 100 shares.

Each person's proportional holdings remain unchanged — only the unit of denomination has changed. The reverse works the same way.

Hyperliquid also specifically addressed the issue of open orders in this update. If an asset undergoes a 1:10 split, a user's existing sell order for 100 shares obviously cannot remain untouched, as the post-split order quantity would no longer match the new holdings system. Therefore, the system cancels the original orders and recreates them according to the new ratio, applying precision handling based on szDecimals. In other words, this essentially allows balances, orders, and other trading states to be redenominated together.

Now that the update logic is clear, what exactly is this "programmability at the balance layer" useful for?

Use Cases

Jeff Yan's announcement primarily describes the underlying capability of scaleWei, but around this capability, we can already discern several clear application directions for stock tokens.

Use Case 1: Dividends

Dividends are one of the most fundamental rights of traditional stocks. In the traditional brokerage system, this is a standard corporate action. In a typical EVM model, performing a similar operation usually requires recording eligible addresses via a smart contract, then having users claim manually or having the project team distribute to each address individually.

scaleWei offers another possibility — directly distributing dividend assets to users based on their stock token balances on HyperCore, in proportion to their holdings. Suppose a listed company's stock token appears on Hyperliquid in the future, and the company decides to pay a $1 dividend per share — Alice holds 100 shares, Bob holds 50, Charlie holds 10. The system can directly distribute the dividend assets to each account based on holding ratios, without users needing to Claim manually or the project team calling contracts one by one. HyperCore itself can complete the batch transfer.

Use Case 2: Stock Splits and Reverse Splits

This is actually the scenario already explicitly covered by this update. When token and referenceToken are the same asset, scaleWei can uniformly adjust all holders' balances by the same ratio.

Therefore, if a HIP-1 asset needs a 1:10 split, a 10:1 reverse split, or even an adjustment to the minimum trading unit, it can be executed directly, with the system canceling and recreating open orders simultaneously. For a trading system that genuinely aims to support stocks and ETFs, this type of "corporate action" is a standard requirement.

Use Case 3: Rebasing

A similar mechanism can also be used for rebasing. In simple terms, when the total supply or the unit of an asset itself is adjusted (particularly common during pre-market stock token conversions, where share counts are adjusted accordingly), the relative holding ratios between users remain unchanged.

Previously, such operations often relied on the token contract's own logic; going forward, they can become a native capability of HyperCore.

Use Case 4: Airdrops

Another relatively straightforward use case is airdrops. The referenceToken does not have to equal the token being distributed, so in theory, asset B can be distributed directly based on the proportional holdings of asset A.

For example, if a project decides to distribute another token to holders of a HIP-1 asset, the system can directly read users' A balances on HyperCore and distribute B from a designated Treasury address proportionally.

This means that, at least within HyperCore, some traditional "claim-based airdrops" could potentially be simplified into the system directly completing balance distribution.

Filling the "Corporate Action" Gap for Tokenized Stocks

It should be emphasized that this update from Jeff Yan currently focuses only on underlying functionality and does not mean Hyperliquid has announced dividends for stock tokens on its platform. However, from an infrastructure perspective, the "distribute assets to accounts based on holding ratios" capability required by the aforementioned use cases now has a corresponding technical path.

Looking at the potential applications collectively, the real significance of this Hyperliquid update is that it promises to fill the "corporate action" capability gap for on-chain assets.

Over the past few years, when the industry discussed tokenized stocks, the focus has often been on — "Can stocks be put on-chain?" But if the goal is to truly bring stocks on-chain, the issue goes far beyond that. After a stock is issued, a series of corporate actions continuously occur: dividends, splits, reverse splits, rights offerings, asset distributions, and more.

Therefore, a truly complete on-chain stock infrastructure needs not only the ability to "trade stocks," but also the ability to handle changes in asset states beyond trading — and this is precisely the area this Hyperliquid update begins to address.

From this perspective, scaleWei is more like adding a piece of infrastructure to the next phase of Hyperliquid — enabling on-chain financial assets to not only be "tradable," but also to undergo various corporate actions just like real-world financial assets.