# Hyperbolic Protocol https\://hyperbolicprotocol.com/ {% hint style="warning" %} To read about the OKLG/SMOL migration to HYPE, please [click here to review our blog post](https://medium.com/hyperbolic-protocol/hyperbolic-protocol-5753a7b47640). {% endhint %}
Hyperbolic Protocol (HYPE) is the first-of-its-kind **100% fully on-chain** collateralized lending protocol that leverages built-in[ Uniswap V3 TWAPs](https://docs.uniswap.org/concepts/protocol/oracle) to drive automated variable APRs and protocol usage fees to maximize yield, protocol growth, and ultimately sustainability. Unlike other lending/borrowing platforms, HYPE allows for any asset with a liquid Uniswap V3 pool and cardinality wide enough to support a 5-min TWAP to be used as collateral to borrow against. Using HYPE, borrowers can deposit a number of both stable and exotic collateral tokens to borrow ETH that can be paid back at a later time. From unexpected expenses to leveraging holdings for new investments, HYPE allows an individual to obtain and utilize liquid capital while maintaining their positions. Holders of HYPE and external LPs receive real yield paid in ETH with no staking required that is collected from protocol usage fees. ### [Protocol Summary](/protocol-summary) Summary highlights of the Hyperbolic Protocol. ### [Tokenomics](/tokenomics) Provides distribution details of HYPE's supply, as well as, liquidity and general token information. ### [Borrowing](/borrowing) Contains information about the lending pools and fees associated with borrowing. ### [Paying Back](/paying-back) Answers any questions regarding paying back a loan. ### [Loan Default](/loan-defaulting-liquidation) Describes details on the process and execution of defaulting on a loan and the thresholds/details of liquidation. ### [Protocol Rewards](/protocol-rewards) Goes over the benefits of holding HYPE and receiving real yield. ### [Games](/games) Dedicated to HYPE's future game contracts to understand how each game is played when made available. # Protocol Summary https\://hyperbolicprotocol.com/
* Borrowers deposit anything from stable to exotic crypto assets as collateral and borrow ETH to be paid back over time. * HYPE investors earn [real sustainable yield](/protocol-rewards) from collected [origination](/borrowing#origination-fees) & [APR](/borrowing#apr) fees without staking. * There is both a prioritized protocol-owned lending pool that pays 100% of fees to HYPE holders and an external pool that LPs earn the lion share of fees by providing lending liquidity. * All position health & LTV calculations are 100% on-chain & secure. * Wide variety of loan collateral options available with the ability to add more with ease. * Easy to adjust [token taxes](/tokenomics#token-trade-tax) and [APR](/borrowing#apr) floor & ceiling to ensure competitiveness with the industry. * No possibility of cascading liquidations for HYPE loans. * Collateralized HYPE loans still earn protocol fees for borrowers. # Tokenomics https\://hyperbolicprotocol.com/ ### Token Contract [0x85225Ed797fd4128Ac45A992C46eA4681a7A15dA](https://etherscan.io/token/0x85225Ed797fd4128Ac45A992C46eA4681a7A15dA) ### Supply 100,000,000 HYPE ### Distribution * 7.9M (7.9%) HYPE to Uniswap V3 liquidity * 52M (52%) HYPE used to airdrop OKLG/SMOL holders at the snapshot blocks * 10M (10%) HYPE to a [lock contract](https://etherscan.io/address/0x02ffdaceb369b54255b6f20d640c5829f029061f) that can never leave. We are able to withdraw [protocol rewards](/protocol-rewards) from this 10% supply through the [lock contract](https://etherscan.io/address/0x02ffdaceb369b54255b6f20d640c5829f029061f), however, the tokens will remain out of circulation forever. * 30.1M (30.1%) HYPE will initially will reside in the [HYPE treasury](https://etherscan.io/address/0x532C1f04E76C2AA6e146dfFa59a0cb0f68DAF21D) to be used to add to LP, strategic OTC, CEX listings, but within the first few weeks after launch leftover will be burned. ### Token Trade Tax Currently, there are no trade taxes to buy or sell HYPE. If needed, a variable tax to buy HYPE can be enabled that will range between 0% - 4%, which would be solely used to fund the lending pool. The tax to buy HYPE is a function of the lending pool utilization. As ETH is borrowed from the lending pool, the buy tax experienced by a new investor will increase automatically to refill the lending pool, and as the lending pool is refilled through both trade taxes and borrowers paying back their loans, the buy tax will automatically trend towards 0. Other DeFi models utilize governance tokens that serve little to no purpose outside of providing votes on protocol decision-making, with liquidity providers being separate investors who front capital used for the protocol that earn fees from usage. We are experimenting with a slightly different model where there is a single HYPE token that earns an investor governance power, should we migrate the HYPE protocol over to a DAO, and allows them to serve as a liquidity provider just by holding HYPE. As such, investors would pay a small variable trade tax to buy HYPE tokens, which can be considered the fee required to serve as said liquidity provider and earn real yield from protocol fees in the form of [protocol rewards](/protocol-rewards). ### Initial Liquidity * [0.3% Fee Pool Position](https://etherscan.io/tx/0xee9961624e956cf4b1163e30fd8e8b65a4d07abb55fcaeb6806283ee8ec21974) * [1% Fee Pool Position](https://etherscan.io/tx/0xa833386ec8afdb9cf7ff99a0cb78f848e5da31065ef5fde03a1ffcf19aa89dd1) # Borrowing https\://hyperbolicprotocol.com/ ### Funding the Lending Pool The lending pool is funded and added to via a small [trade tax](/tokenomics#tax) and can be refilled from earned protocol rewards by the team as needed. As pool utilization goes up, trade taxes will trend upwards to refill the lending pool. In addition to trade taxes, [borrow interest rates](#interest-rates) will also trend upwards so that as borrowers pay back their loans, collected fees can also be used to refill the lending pool as needed. ### Pool Fund Custodian The lending pool business logic and all borrowable ETH is stored in the [lending pool contract](https://etherscan.io/address/0x3B57D742f3D023FA97C622584db9C235650c1653). For more technical information on functionality you can review the HYPE smart contract audit conducted by [Solidity Finance](https://solidity.finance/audits/HyperbolicProtocol/) or ask a team member for any clarification. ### Fees #### Origination Fees 2% of any borrowed ETH from a loan is distributed to all HYPE holders as [protocol rewards](/protocol-rewards). #### APR Similar to the [token trade taxes](/tokenomics#token-trade-tax), interest rates are calculated based on the lending pool size & utilization compared to the current market cap of HYPE. Interest rates range between 2% - 15% APR. As pool utilization increases, meaning lower available ETH in the pool to borrow, interest rates increase to account for demand. When utilization goes down, meaning ETH is added to the pool, interest rates decrease to incentivize new loans. ### Loan to Value (LTV) Loan to Value (LTV) is the ratio of the value of your borrowed assets to the value of collateral put up against your loan. A maximum LTV of 60% will be used at the start and will be adjusted over time as the market cap of HYPE grows, as well as, additional collateral options being added. With a LTV ratio of 60%, up to 0.6 ETH can be borrowed for every 1 ETH worth of collateral used to secure the loan. ### Available Collateral In addition to HYPE, which will generally always be available to borrow against, we will periodically review and add/remove assets that contain highly liquid Uniswap V3 pools with on-chain oracle cardinalities long enough to support a 5-min TWAP price to be used as collateral. Some examples of assets that contain such pools and are available include WBTC, LINK, and SHIB. Current collateral options can be found on the [HYPE platform](https://hyperbolicprotocol.com/). ### Loan Transferability When a borrower accepts a loan, they will receive a receipt of their loan in the form of an NFT (ticker), which can be transferred as needed. The owner of the NFT is responsible for paying back the loan to receive the initial collateral used for the loan. These NFTs will be automatically burned if the loan defaults and is [liquidated](#liquidation). # How to Borrow Funds ### How do I borrow funds? * After connecting your wallet, select **New Loan.**
* Select the collateral you wish to deposit to secure your loan.
* Enter the amount of collateral to deposit and the amount of ETH you wish to borrow
* Verify the details of your loan's LTV and estimated weekly fees are correct and select **Create Loan** to deposit your collateral and secure a loan of ETH to your wallet**.**
# Paying Back https\://hyperbolicprotocol.com/ Borrowers will pay back the borrowed principal amount of ETH plus APR fees accrued over the lifetime of the loan. ### Partial Pay Back ETH provided to pay back the loan will be applied to accumulated fees before being applied to the principal balance. The minimum amount that can be partially paid back is the total amount of interest rate fees that have been accumulated by the loan to date. For example, if a loan of 10 ETH has accumulated 0.01 ETH in fees, then the minimum amount that can be paid back is 0.01 ETH, and any amount over 0.01 ETH will be applied to the loans 10 ETH principal balance. This will effectively decrease the loan's LTV, reducing probability of defaulting and affording the ability to borrow additional ETH on this loan at a later time as needed. ### Depositing Additional Collateral Additional collateral can be deposited to reduce the loan's LTV ratio and allow for additional ETH to be borrowed. ### Payment Timeline There is no set time frame that a loan must be paid back in. As long as a loan's LTV ratio remains under the [default threshold](/loan-defaulting-liquidation), the loan will remain open, but will continue to accumulate APR fees over time. # How to Pay Back a Loan ### How do I pay back my loan? * In the **My Loans** section, select **Pay Back Loan.**
* Your loan's current details including LTV and accumulated fees will be displayed.
* Enter in the amount of ETH you wish to pay back. As a reminder, the ETH you provide will be applied to accumulated fees before being applied to the principal balance.\
* Your loan's updated LTV and estimated weekly fees will be displayed based on the amount of ETH being paid back. After verifying these details, select **Pay Back Loan**, approve the transaction and your loan will be paid back with the ETH you provide.\
# How to Deposit Collateral ### How do I deposit more collateral? * In the **My Loans** section, select the **Deposit** button that will be labeled based on the collateral used for the loan.
* Your loan's current details including LTV and accumulated fees will be displayed.
* Enter an amount of additional collateral to deposit.
* Your loan's updated LTV and estimated weekly fees will be displayed based on the amount of collateral being deposited. After verifying these details, select **Deposit** and your additional collateral will be deposited into your loan.
# HLP - Provide Liquidity https\://hyperbolicprotocol.com/ 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](/borrowing#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](/borrowing#funding-the-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. # Loan Defaulting/Liquidation https\://hyperbolicprotocol.com/ Defaulting on a loan (or liquidation) occurs when a position's LTV (loan-to-value) exceeds a threshold close to or at 100%, meaning the borrowed value exceeds the collateral value put up for the loan. Using the below formula, if the collateral value + accrued fees cause the loan's LTV to exceed 92%, the loan will be liquidated via [Chainlink Automations](https://chain.link/automation), which relinquishes the user's collateral to the protocol. The 92% LTV default threshold effectively means a borrower will pay a 8% liquidation fee at the time default occurs. ``` LTV % = ((loan amount + fees) / collateral value) * 100 ``` ### Collateral Value Changes LTV of a collateralized loan is a function of the value of the collateral put up for a loan, the borrowed asset value, and amount borrowed (all valued in USD). All assets and values are continuously monitored on-chain using [Chainlink Automations](https://chain.link/automation) which handles executing loan liquidation as needed. #### Example: Jay secures a 0.5 ETH loan with a 5% APR using 2 billion PEPE as collateral, valued at 1 ETH.\ Having borrowed 0.5 ETH, Jay's loan has a 50% LTV ratio.\ After a period of time, along with accumulating 0.1 ETH in interest fees, the value of PEPE could also change. #### PEPE Increases: If the value of PEPE were to increase to where Jay's 2 billion PEPE collateral is now worth 2 ETH, then the loan's LTV ratio would decrease to 25% allowing Jay to potentially borrow additional funds against the original collateral. #### PEPE Decreases: If the value of PEPE were to decrease to where Jay's 2 billion PEPE collateral is now only worth 0.7 ETH, Jay's LTV ratio would then increase to 85%.\ Jay would need to pay back some or all of the borrowed ETH before the loan's LTV ratio reaches 92% or Jay's loan will default and the 2 billion PEPE will be relinquished to the protocol. ### Defaulted Collateral Assets Assets acquired through the defaulting of loans against the protocol owned lending pool are evaluated on a case by case basis by examining the current and future value of each asset to determine the best course of action.\ \ Capital gained may be used for a number of things that include, but are not limited to: adding funds to the lending pool, distributing to protocol rewards, marketing or other protocol expenses. Assets acquired through the defaulting of loans against the [HLP lending pool](/hlp-provide-liquidity) are automatically liquidated with 100% of the liquidated funds being returned to the HLP lending pool. If needed, auto-liquidation can be disabled for a collateral option. # Protocol Rewards https\://hyperbolicprotocol.com/ All [protocol fees](/borrowing#fees) collected from users borrowing and paying back their loans are distributed to HYPE holders in native Ether (ETH) proportional to their holdings. Simply put, the more HYPE you hold, the more rewards you will earn. ### Distribution Schedule Rewards are distributed in the same transaction that fees are collected from borrowers securing a loan and paying back their loans. ### Claiming Protocol rewards can be claimed manually on the HYPE platform via rewards section:
Alternatively, any unclaimed rewards will be sent automatically to a holder's wallet when the wallet performs any HYPE transaction, such as buying, selling or transferring HYPE. Sending a single HYPE token to another wallet to have unclaimed rewards automatically claimed may be more gas efficient than initiating a manual rewards claim on the HYPE website. ### HYPE Collateral Even though HYPE collateral is held on the contract during the loan process, the HYPE collateral will still generate protocol rewards for its owner. # Contracts https\://solidity.finance/audits/HyperbolicProtocol/ | Name | Info | CA | | -------------------- | ----------------------------- | --------------------------------------------------------------------------------------------------------------------- | | HyperbolicProtocol | HYPE Token | [0x85225ed797fd4128ac45a992c46ea4681a7a15da](https://etherscan.io/address/0x85225ed797fd4128ac45a992c46ea4681a7a15da) | | LendingPool | HYPE lending pool | [0x3B57D742f3D023FA97C622584db9C235650c1653](https://etherscan.io/address/0x3B57D742f3D023FA97C622584db9C235650c1653) | | LoanToken | lHYPE loan NFT | [0xE69e34B9f90bbd31FF72c3c4Fa006D7E21897177](https://etherscan.io/address/0xE69e34B9f90bbd31FF72c3c4Fa006D7E21897177) | | LendingPoolCustodian | Main lending pool custodian | [0x1781077acAeA50B9e8fBD634a87b3E04E3c80264](https://etherscan.io/address/0x1781077acAeA50B9e8fBD634a87b3E04E3c80264) | | LendingRewards | HYPE rewards | [0x300648a601c584E6379fa0D6a31CbBFCcA6177e4](https://etherscan.io/address/0x300648a601c584E6379fa0D6a31CbBFCcA6177e4) | | RewardsLocker | | [0x02FFdaCeb369b54255b6f20d640C5829F029061F](https://etherscan.io/address/0x02FFdaCeb369b54255b6f20d640C5829F029061F) | | TwapUtils | | [0xBf1858b24243Ecbcf7d940f458e36CB7401c2366](https://etherscan.io/address/0xBf1858b24243Ecbcf7d940f458e36CB7401c2366) | | LendingPoolExtLP | External lending pool | [0xf55d5e761b6fe3f43e55874ce2973cac575d16c7](https://etherscan.io/address/0xf55d5e761b6fe3f43e55874ce2973cac575d16c7) | | LendingPoolCustodian | External LP custodian | [0x275b225c30e29fd62755a611d59fea491eda5998](https://etherscan.io/address/0x275b225c30e29fd62755a611d59fea491eda5998) | | HLP | HYPE Liquidity Provider token | [0x6118b4ae99146d3530b35f5708c5ab97bd0e54fe](https://etherscan.io/token/0x6118b4ae99146d3530b35f5708c5ab97bd0e54fe) | | LendingRewards | HLP rewards | [0x12ad8cec0cecd91a1d5c71ac0bb0d54a5154f9c4](https://etherscan.io/address/0x12ad8cec0cecd91a1d5c71ac0bb0d54a5154f9c4) | | LoanToken | lHYPE external loan NFT | [0xa223d06030056f0f85c1f9547ff2790311e9430a](https://etherscan.io/address/0xa223d06030056f0f85c1f9547ff2790311e9430a) | # Games https\://hyperbolicprotocol.com/ {% hint style="info" %} SMOL games will be migrated to HYPE, but will not be available until sometime after launch. Updates will be provided as SMOL games become available. {% endhint %} HYPE uses Chainlink's [Verifiable Random Function](https://docs.chain.link/vrf/v2/introduction/) (VRF) to provide a provably fair and verifiable random number generator (RNG) that enables the HYPE game contracts to access random values without compromising security or usability. HYPE will have 4 games: * [Coin Flip](/games/coin-flip) - Pick heads or tails for a true 50/50 wager. * [Dice](/games/dice) - Select the side of the dice you think the roll will land on. * [Battles ](/games/battles)- Choose your stakes and go head to head with another player for any ERC-20 token. * [Over / Under](/games/over-under) - Pick a number between 2 and 99 and choose if a randomly generated number will be over or under your chosen number. Each game has a deflationary aspect in that when a player loses, 100% of their wager is **burned**, however, if a player wins, the total **minted** HYPE winnings is slightly less than the odds of the game. * [Coin Flip ](/games/coin-flip)- 95% of wagered amount * [Dice](/games/dice) - 500% of wagered amount * [Battles](/games/battles) - 95% of battle wager * [Over / Under](/games/over-under) - Payout varies based on number chosen and overall odds of winning # Coin Flip ### Everyone enjoys a good old fashioned flip of the coin! ## Coming Soon! # Over / Under ### Over / Under gives you the freedom to make your own odds! Like high risk & high reward? Choose over 99 or under 2 and win 9500% of your wager! Want simpler odds? Choose over 50 or under 51 for 50/50 odds and win 95% of your wager. ## Coming Soon! # Dice ### Choose a side and roll the dice for your chance to win 500% of your wager! ### Coming Soon! # Battles ### Go head to head with other players in a winner take all battle! ### Coming Soon!