Hyperliquid HLP and vaults: how they work

HLP (Hyperliquidity Provider) is Hyperliquid's protocol vault: a pool of community deposits that makes markets, performs backstop liquidations and receives part of the trading fees, with its profit and loss shared by everyone who deposited. Next to it sit user vaults, where one trader manages pooled money for depositors in exchange for a share of the profits.

This guide explains how each kind of vault works according to Hyperliquid's own documentation, what depositors give up in return (lock-ups, withdrawal rules, risk) and where to see vault data on our pages.

What HLP does

Hyperliquid describes HLP as a protocol vault that provides liquidity through several market making strategies, performs liquidations, supplies USDC in Earn and accrues a portion of trading fees. It is fully community-owned: anyone can deposit and share its profit and loss.¹

Three sources feed its result:

• Market making. HLP quotes on the order books and carries the price risk of whatever inventory it ends up holding.
• Liquidations. Through the liquidator vault (next section), HLP takes over positions that could not be closed on the book. On average this is profitable for the liquidator, according to the docs.²
• Fees. Hyperliquid states that trading fees go to the community, namely HLP, the Assistance Fund and market deployers, rather than to the team.³

Protocol vaults charge no fees and take no profit share.⁴ The cost of depositing is time: HLP has a deposit lock-up of 4 days, so a withdrawal is possible 4 days after the most recent deposit.¹

On our side, HLP shows up as a parent vault with several strategy vaults beneath it. The strategy vaults take no deposits of their own and are part of HLP, so our vault list leaves them out, and the parent address itself holds no open positions: its trading appears in the strategy vaults.

The liquidator vault

Most liquidations on Hyperliquid never touch a vault. When an account's equity falls below its maintenance margin, the exchange sends market orders for the position to the order book, and anyone can take the other side. If that leaves the account above the requirement, the remaining collateral stays with the trader.²

The liquidator vault is the backstop for the cases where that fails. If equity falls below two thirds of the maintenance margin without a successful book liquidation, the liquidator vault, a component strategy of HLP, takes the position over:²

• For a cross margin position, all of the trader's cross positions and cross margin move to the liquidator. A trader with no isolated positions is left with zero account equity.
• For an isolated position, only that position and its isolated margin move. The rest of the account is untouched.

In a backstop liquidation the maintenance margin is not returned to the trader. The docs give the reason: the liquidator needs that buffer for backstop liquidations to be profitable on average. On many venues this profit goes to the operator or to privileged market makers; on Hyperliquid it flows to HLP's depositors.²

If even the backstop cannot absorb a loss and an account's value turns negative, Hyperliquid falls back to auto-deleveraging of profitable positions on the other side. That is the last line, after the book and the liquidator vault.

User vaults: how a trader runs one

Any trader can open a vault and trade other people's deposits alongside their own. Hyperliquid now calls these HyperCore vaults "legacy", but their rules still apply:⁵

• Creating one needs a name and description (neither can be changed later) and a deposit of at least 100 USDC. Creation costs a 10k USDC gas fee, which goes to the protocol like trading fees.
• Skin in the game. The leader must keep at least 5% of the vault at all times and cannot withdraw below that share.⁵
• Profit share. The leader receives 10% of the profits.⁵
• What it can trade. Validator-operated perpetuals only, not spot and not builder-deployed (HIP-3) perpetuals.
• Closing. A leader can close the vault once all positions are closed; depositors then receive their share.

For depositors, the lock-up of a user vault is 1 day (HLP: 4 days).⁶

What happens when someone withdraws

A withdrawal from a vault can force trading. The docs describe the order of steps:⁵

1. If the vault has enough free margin to keep its open positions at their set leverage, the withdrawal does not touch them.
2. If not, open orders that use margin are cancelled, those using the least margin first.
3. If that still does not free enough margin, 20% of the positions are closed automatically, and this repeats until the withdrawal can be paid.⁵

A leader can instead set the vault to always close positions proportionally on withdrawals, which keeps the liquidation prices of the remaining positions similar. For depositors this means a large withdrawal by someone else can change the vault's positions.

Vaults on the HyperEVM

Hyperliquid's documentation now treats vaults as something builders create on the HyperEVM. A vault contract can use CoreWriter and precompiles to read from and write to HyperCore without trust assumptions, follow standards such as ERC-4626 for tokenised shares, trade onchain directly or delegate to authorised agents, and use spot and HIP-3 markets in any quote asset. The docs call this a strict improvement over the legacy vaults introduced in 2023, which do not support HIP-3 or spot trading.⁷

The accounting of such a vault is whatever its contract defines. Lock-ups, fees and profit shares are therefore no longer one set of protocol rules but differ from vault to vault.

Risks to read before depositing

• Losses are shared too. A deposit earns a share of the vault's losses as well as its profits, and Hyperliquid notes that a vault's past performance does not tell its future returns.⁶
• Lock-ups. Money in HLP cannot be withdrawn for 4 days after the latest deposit, money in a user vault for 1 day.⁶
• Leader control. In a user vault one trader decides every position. The 5% minimum share aligns the leader with depositors but does not limit what they trade.⁵
• Withdrawals of others. As shown above, a large withdrawal can close part of a vault's positions.

Where to see vault data

The vault leaderboard lists Hyperliquid vaults with their TVL, APR and profit and loss over 7 days, 30 days and all-time as Hyperliquid reports them, plus the leader, followers, leader commission and age. Every plan sees every column; Free shows the 25 largest vaults by TVL, Pro and Desk the whole list with search, filters and paging.

HLP itself has a panel in the Hyperliquid protocol section: its account value over its whole history, the APR as reported and its profit and loss over 7 days, 30 days and all-time, read every 15 minutes. The trader leaderboard works the other way round: it leaves vaults out, HLP included, so that pooled money does not compete with single traders.