The Hyperliquid Liquidity Provider vault — a protocol-run pool that makes markets and acts as backstop liquidator. Anyone can deposit USDC and take a share of its profit and loss.
Where the returns come from
Market making, earning the spread between bid and ask. Liquidations, absorbing positions the book can’t clear at a good price. And a share of trading fees.
None of that is yield in the lending sense. HLP takes real positions and carries real losses.
What depositors are exposed to
Adverse selection. A market maker’s worst fills are the ones an informed trader wanted, and that risk concentrates when volatility spikes. As backstop liquidator, HLP also inherits positions nobody else would take, at prices set by a cascade.
HLP versus user vaults
HLP charges no performance fee and is run by the protocol. User vaults charge 10% and are run by individuals. Both give you one strategy with your capital pooled into it, and neither lets you choose what it trades.