About
Last updated
Last updated
Hyperdrive is a multi-functional DeFi protocol built on Hyperliquid's HyperEVM. Hyperdrive's core product is its stablecoin money market, which creates multiple opportunities for our users. Earn yield on stablecoin deposits, access one-click yield strategies such as the leveraged HLP vault, use your crypto assets as collateral for borrowing, and more.
Hyperdrive also has the first 0% fee $HYPE liquid staking product - $HYPED.
At the heart of Hyperdrive are the lending markets. Users can deposit assets to receive a share of the yield, paid by borrowers who use the lending market.
When a user deposits an asset into a market, they receive a yield bearing receipt token, Over time, the receipt grows in value based on the yield generated from borrowing interest.
A guide to deposit assets into Hyperdrive is available under the Deposit Assets page.
Users looking to borrow assets may deposit approved assets into their respective lending markets. Based on the value of their portfolio, users can Borrow assets from the lending market. A dynamic interest rate is applied to the borrowed funds, and funds are distributed to lenders in the market.
At any time, a user can withdraw or deposit different assets into markets, provided their borrowing health is in good standing. Instead of taking each asset as individual borrowing collateral, Hyperdrive looks at the full range of assets in a user's portfolio, and creates a health score based on the value of the assets.
When a user wishes to borrow from a money market they need to provide collateral to secure their borrowing position. A traditional two-sided money market would then lend out that collateral to borrowers which presents liquidity risks to both the protocol and the depositor. With Hyperdrive's approach, user assets are only used within the confines of their own portfolio and are not available for other users to borrow.
Isolated collateral allows Hyperdrive to alleviate risk and be more secure than traditional lending systems.
The amount of assets users can borrow is based on the value of their collateral and their borrowing health. The Borrowing Limit determines how much assets they can borrow based on their current portfolio. A user's Health Score is a number out of 1000 that represents a user's outstanding liabilities vs their portfolio value. Higher scores indicate good borrowing health, lower scores indicate poor borrowing health. When a users health score drops below 100, their account is at risk of a partial or full liquidation by the protocol in order to place their account back into a healthy position.
Users can Repay their borrowed asset amounts to decrease their liabilities and raise their health score.
Users can freely withdraw assets in their portfolio, as long as their borrowing health remains in good standing. If a borrower's health score gets too low, their portfolio value can no longer be withdrawn, as their portfolio needs to have enough value to cover a portion of their outstanding liabilities.
Borrowers are charged a dynamic interest rate based on the utilization of the asset in each lending market. This interest is passed back to the lending market in the form of yield to the depositors.
Traditional money markets allow users to borrow assets, but that's where their interaction ends. Hyperdrive drives borrowing demand by providing users innovative DeFi investment strategies, enabling them to grow their portfolio with borrowed funds. Depending on the user risk profile, investment strategies can be geared around leveraged borrowing which comes with a premium on interest rates.
