Hyperliquid vaults and HLP explained

Contents

This guide explains the mechanics and the documented risks. It is not investment advice and makes no forecast of returns. For the wider picture of the chain these vaults run on, see what Hyperliquid is and how it works.

What are Hyperliquid vaults?#

A Hyperliquid vault is an account that many people fund and one strategy trades. Each depositor owns a share of the vault's equity. When the vault gains or loses, every share moves with it. Legacy HyperCore vaults have no private keys: the leader's main account signs trades on the vault's behalf. A HyperEVM vault trades through its own contract code or the agents that contract authorizes.

Hyperliquid now has three kinds of vault, and they work differently.

Sources: legacy HyperCore vaults, for vault leaders, for vault depositors and Hyperliquid vaults overview.

What is HLP and how does it work?#

HLP, short for Hyperliquidity Provider, is the protocol vault built into Hyperliquid. The protocol vaults docs list four jobs: it provides liquidity through several market making strategies, performs liquidations, supplies USDC in Earn and receives a portion of trading fees. Anyone can deposit and share its PnL. The docs call it "fully community-owned."

HLP's address is 0xdfc24b077bc1425ad1dea75bcb6f8158e10df303. Its vault page shows that HLP is split into child vaults, each running one component strategy. On 2 November 2026 the page listed seven component vault addresses, and the vaults list gave HLP's age as 1,277 days.

Market making is the smaller job. Jeff Yan, a Hyperliquid co-founder, wrote in October 2025 that HLP's market making was "negligible", at less than 1% market share, and that its main role is backstop liquidation (Jeff Yan on X, 11 October 2025). He also wrote that each liquidation goes to only one child vault, which keeps a loss in one strategy away from the others.

How do HLP liquidations work?#

Most liquidations on Hyperliquid never reach HLP. When an account's equity falls below its maintenance margin, HyperCore first sends market orders for the position to the order book, where any trader can take the other side (Hyperliquid liquidations). HLP steps in only when the book cannot absorb the position.

The sequence is:

1. Book liquidation. Equity drops below maintenance margin, and HyperCore sends market orders to close the position. For positions over 100,000 USDC, only 20% goes to the book at first. For the next 30 seconds, any further liquidation order covers the whole position.
2. Backstop liquidation. If equity falls below two-thirds of maintenance margin and the book has not closed the position, the liquidator vault, which is one of HLP's strategies, takes over the position and its margin. The trader does not get the maintenance margin back.
3. Auto-deleveraging (ADL). If an account's value goes negative, profitable traders on the other side are ranked by unrealized PnL and leverage, and their positions are closed at the previous mark price against the underwater account (Hyperliquid auto-deleveraging). A user with no open positions never shares the loss.

Backstop liquidations are profitable on average, and on Hyperliquid that profit goes to HLP depositors rather than to an exchange operator. But "on average" includes bad days. During a crash, HLP can end up holding large positions in a market that keeps falling.

HLP does not backstop every market. Each HIP-3 perp DEX has its own onchain backstop liquidator at 0x400..00 + {dex_index}, which covers only its cross-margin assets and falls back to ADL (HIP-3 spec). For how those builder-deployed markets work, read HIP-3 builder-deployed perpetuals explained.

What is the HLP APR?#

The HLP APR on the Hyperliquid vaults page is a trailing figure based on recent PnL. It is not a promised rate. On 2 November 2026 it read -0.11%, and the HLP page showed a past-month return that rounded to 0%. The number moves with every liquidation and every market making day, and it can be negative.

Older posts quote much higher HLP yields. Those figures describe earlier periods. HLP's return depends on how much trading, liquidation flow and volatility the market has, and on how much capital shares that PnL. A bigger HLP splits the same profit across more deposits. The depositor docs put it plainly: "trading is inherently risky, and vaults' past performance is not a guarantee of future returns."

HLP earns nothing from staking. It is a trading strategy funded in USDC, unrelated to HYPE staking rewards. For the HYPE side, see how HYPE staking and staking tiers work.

How do I deposit into HLP or withdraw?#

You deposit into HLP from its vault page in the Hyperliquid app. Click Deposit, enter a USDC amount and confirm. To leave, click Withdraw on the same page. HLP charges no deposit fee, no withdrawal fee and no profit share.

The HLP lockup is 4 days from your most recent deposit. The protocol vaults docs give an example: deposit on 14 September at 08:00 and you can withdraw from 18 September at 08:00. Any new deposit restarts the clock on your whole balance.

Developers use the vaultTransfer action on the exchange endpoint, with vaultAddress, isDeposit and usd (exchange endpoint). Smart contracts on HyperEVM can do the same through CoreWriter at 0x3333333333333333333333333333333333333333, where vault transfer is action 2 (CoreWriter actions). The docs say CoreWriter vault transfers are delayed onchain for a few seconds.

HLP losses and incidents#

HLP has had losing days. This table lists the main documented events. Figures come from Hyperliquid's own posts where one exists. The last row comes from an independent researcher and is labelled that way.

The four events had different triggers, and the sources do not give them one common cause. What they share is the risk they show: when a large position on a thin or fast-moving market cannot be closed on the order book, it lands on HLP's backstop, and the protocol may step in. In March 2025 a trader withdrew unrealized profit, which reduced their margin, and was liquidated into the backstop. The JELLY post describes suspicious activity and a validator delisting, and October 2025 was a market-wide crash. The researcher behind the XPL report says margin withdrawals brought those liquidations forward, but says public data cannot show what caused the drop or who caused it.

User vaults: profit share, creation fee and lockup#

User vaults, now called legacy HyperCore vaults, let one trader manage pooled money. They have run since 2023.

For depositors. A deposit buys a share of the vault's equity at its value when you deposit. The depositor docs give a worked example. You put 100 USDC into a vault holding 900 USDC, so you own 10%. The vault grows to 2,000 USDC with no other flows. Your 10% is 200 USDC, the leader takes 10% of your 100 USDC profit, and you withdraw 190 USDC. Withdrawals can close part of the vault's positions and slip in price. User vaults lock deposits for 1 day.

For leaders. Anyone can create a vault:

• Choose a name and description. You cannot change either later.
• Deposit at least 100 USDC.
• Pay a 10,000 USDC gas fee, which the protocol distributes the same way as trading fees. Some older guides quote 100 USDC for this fee. The docs said 10,000 USDC on 2 November 2026.
• Keep at least 5% of the vault at all times. You cannot withdraw if it would take you below 5%.

The leader keeps 10% of profits. Vaults trade only validator-operated perps, not spot and not HIP-3 perps. If a withdrawal needs more margin than the vault has free, HyperCore cancels open orders first, then closes 20% of positions at a time until it frees enough. A leader can close the vault once all its positions are closed, and every depositor then receives their share.

Vault trading volume counts separately from the leader's own account for fee tiers (Hyperliquid fees). For every fee type on Hyperliquid, see the guide to Hyperliquid fees.

How to check a vault before you deposit#

Each vault page shows PnL, max drawdown, volume, open positions, trade history, TVL, APR and how long depositors have stayed. Before depositing, check four things:

• Max drawdown against total return. A vault that made 40% after a 60% drawdown carries more risk than its return suggests.
• Leader's share. The minimum is 5%. A leader with more of their own money in the vault shares more of its losses.
• Leverage and concentration. Open positions show whether one market or one direction dominates.
• Depositor history. The page shows how many people have deposited and for how long. A vault whose depositors stayed through losing months has a longer record to judge.

The largest user vaults on 2 November 2026, and how the trader leaderboard ranks PnL, ROI and volume, are in our guide to Hyperliquid's top traders.

HyperEVM vaults and CoreWriter#

Hyperliquid's docs now call HyperCore user vaults "legacy" and point builders to HyperEVM. A HyperEVM vault is a smart contract that holds deposits and trades on HyperCore through the CoreWriter system contract. It reads its HyperCore positions and balances through precompiles, so its accounting is fully onchain.

The docs list what this adds over legacy vaults:

• More markets. A HyperEVM vault can trade spot and HIP-3 markets in any quote asset. Legacy vaults cannot.
• Custom accounting. Builders can follow standards such as ERC-4626 for tokenized vault shares, so a deposit can become a token that other apps accept.
• Delegated trading. The contract can authorize agents to trade for it through CoreWriter.

The docs describe this as "a strict improvement" over legacy vaults. For a depositor it also brings new risks: bugs in the contract, any upgrade keys the builder holds, and fees or lockups the builder sets. HLP and legacy vaults are native HyperCore accounts with rules set by the protocol. A HyperEVM vault follows whatever rules its contract and its operator set. For how HyperEVM contracts talk to HyperCore, read HyperCore vs HyperEVM.

Not every HyperEVM vault is a trading vault#

Some apps use "vault" for a contract that only holds positions. Totalis, which publishes this guide, runs one: its glossary defines the Totalis vault as "the Totalis contract on HyperEVM that holds USDC and every position." It holds Combos of HIP-4 outcomes until Hyperliquid's results settle them, runs no strategy, and takes no deposits for returns. Market makers lock USDC there against what they would owe if every leg won, and the maker collateral guide shows how a maker can lower that to what its whole book can lose at once, an idea explained more widely in collateral efficiency for Combos. Traders reach it through the Totalis app.