🏦HLP - Provide Liquidity


HYPE Liquidity Provider (HLP) tokens are minted for users who wish to deposit ETH into the HYPE protocol.

HLP represents a user's share of the external liquidity as a 1-to-1 ratio to the amount of ETH that a user deposits inside the HLP lending pool for the protocol, i.e. if a user deposits 1 ETH they will receive 1 HLP.

When withdrawing ETH from the HLP lending pool, HLP is burned.

Fee Distribution

All fees from loans against the HLP lending pool are distributed to each HLP holder based on the amount of HLP held proportional to the total amount of HLP in circulation.

Fees generated from loans opened against the HLP funded lending pool are distributed as follows:

  • 75% to HLP holders

  • 25% to HYPE holders

Lending Pool Prioritization

The protocol owned lending pool, where all fees are distributed to HYPE holders, is prioritized for new loans. Once the protocol owned lending pool utilization is high enough, new loans are then opened against the HLP lending pool where HLP holders earn fee rewards from those loans.

Max Borrow Limits for HLP Protection

By default, there is no limit to how much any one collateral can be used to borrow against the external liquidity pool, however, an option exists to configure a maximum borrow amount for each collateral option. This option will mainly be used to support smaller liquidity token collateral options and reduce the risk of over-exposure in a single token.

If a borrow limit is set and reached, the token will no longer be available to borrow against until loans using the token as collateral are paid back.

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