Yield-bearing asset that is able to be used as collateral. That's the holy grail in not only crypto, but in all of finance. We see evidence of this through popular strategies such as long USD Treasuries and short JPY.

When Hyperdrive unlocks HLP as a collateral asset, a 0 to 1 shift will take place in the market. A sustainable strategy boosted by liquidation privileges on Hyperliquid, not ponzi yield driven by minting tokens, that is leverageable on Hyperdrive.

Some key characteristics of HLP are its:

✅ 100% Transparent Proof of Reserves

✅ Sustainable MM Strategies

✅ Low Volatility

✅ 0% Performance Fees

✅ To Be Tokenized and Supported as Collateral on Hyperdrive

✅ Swift Withdrawal Liquidity with Hyperdrive - No AMM slippage when liquidating deposits

Addressing Recent Events

In March, there were two economic attacks on the HLP vault. Both attacks used a strategy that liquidated the trader's own toxic position. March 12's incident left a 0.7% loss for HLP, while March 26's ended up in profit for HLP after Hyperliquid validators closed toxic positions at an agreed mark price.

The outcome of these events left HLP with minimal losses, and an upgraded strategy that is more resilient against attacks. These events also showed that HLP could process all withdrawals smoothly, even as there were large panic outflows from the vault.

Empirical Analysis of HLP Performance:

Due to the attacks, there is some ongoing negative sentiment around HLP.

• 1Y Return = >19%, inclusive of March's drawdown

• More than 70% of daily returns are positive

• <1% of daily returns were below -1% over the past 14 months

• Significantly lower volatility than major cryptoassets like BTC and ETH

Most traditional investors would kill to get access to funds with this type of risk-adjusted performance.

HLP's Strategy

HLP's performance is driven by proprietary market making strategies set by Hyperliquid, as well as priority access to liquidation orderflow.

Liquidations and volatility often cause extreme wicks, allowing buyers to cheaply acquire tokens from distressed positions. On CEXs, this orderflow is often privatized, giving the internal desk or privilieged market makers an advantage. On Hyperliquid, HLP vault depositors get access to this orderflow.

Farming Alpha

Hyperdrive will support partner assets such as Kinetiq and Thunderhead’s HYPE LSTs on its lending markets in the near future. To further boost yields and point farming, users can supply kHYPE or stHYPE on Hyperdrive, borrow USDC, and loop into tokenized HLP.

Maximize exposure across Hyperliquid verticals with Hyperdrive.

The Ultimate Collateral Asset

Hyperdrive’s tokenized HLP is coming soon, bringing the ultimate collateral asset live to the public. Users will be able to use it as collateral on Hyperdrive’s very own spot lending market, allowing them to leverage loop for extra yields, or borrow USDC from it to use elsewhere.

The Home of Hyperliquid Yields.

Hyperdrive.