Liquid Perpetual Positions

Liquid Perpetual Futures positions allow users to have a more efficient leveraged exposure to the desired asset while increasing capital efficiency.

They are a type of ERC-4626 vaults that allows users to use their Hyperliquid perpetual futures positions as collateral on HyperLend.

Users deposit USDC into the vault, which then transfers it to Hyperliquid L1 exchange, where it's used as a margin to open a futures position. Profits (or losses) + funding fees are accrued to the vault.

Vault shares (represented as ERC20 tokens) can then be used as collateral in Isolated Pairs.

To redeem the underlying USDC, shares are burned, a proportional portion of the position is closed and USDC is transferred back to the vault where it can be claimed.

sharePrice = (perpPositionMargin + PnL + fundingFees) / totalShares

If the futures position is losing money, the share price declines (and if the position is profitable, the share price increases).

Simple Example: How Liquid Perps Work

Imagine you have $1,000 USDC and want to make the most of it without managing complex trades yourself. Here’s how the Liquid Perpetual Vault works:

Step 1: Deposit Your USDC
- You deposit $1,000 USDC into the Liquid Perpetual Vault. In return, you receive vault shares that represent your share of the vault. For example, if the share price is $1, you’ll receive 1,000 shares.

Step 2: The Vault Puts Your Funds to Work
- The vault uses your USDC as collateral to open a perpetual futures position on the Hyperliquid exchange. This is like placing a leveraged trade on an asset, such as ETH.
- The value of your vault shares changes based on the performance of these positions:
  - If the position generates profits, the value of your shares increases.
  - If the position takes losses, the value of your shares decreases.

Step 3: Redeem Your USDC
- When you’re ready to withdraw, you redeem your vault shares.
  - If the vault made a profit, your shares will be worth more. For example, if the share price rises to $1.10, your 1,000 shares would be worth $1,100 USDC.
  - If the vault made a loss, your shares might be worth less. For instance, if the share price drops to $0.90, your 1,000 shares would now equal $900 USDC.

Coming Soon: Use Your Shares in Our dApp

In the future, you’ll also be able to use your vault shares directly in our dApp for additional functionality, such as collateral in other strategies. Stay tuned for updates!

PreviousStrategies Vaults NextLiquid Hyperliquidity Provider (HLP)

Last updated 23 days ago

Simple Example: How Liquid Perps Work

Imagine you have $1,000 USDC and want to make the most of it without managing complex trades yourself. Here’s how the Liquid Perpetual Vault works:

Step 1: Deposit Your USDC

You deposit $1,000 USDC into the Liquid Perpetual Vault. In return, you receive vault shares that represent your share of the vault. For example, if the share price is $1, you’ll receive 1,000 shares.

Step 2: The Vault Puts Your Funds to Work

The vault uses your USDC as collateral to open a perpetual futures position on the Hyperliquid exchange. This is like placing a leveraged trade on an asset, such as ETH.
The value of your vault shares changes based on the performance of these positions:
- If the position generates profits, the value of your shares increases.
- If the position takes losses, the value of your shares decreases.

Step 3: Redeem Your USDC

When you’re ready to withdraw, you redeem your vault shares.
- If the vault made a profit, your shares will be worth more. For example, if the share price rises to $1.10, your 1,000 shares would be worth $1,100 USDC.
- If the vault made a loss, your shares might be worth less. For instance, if the share price drops to $0.90, your 1,000 shares would now equal $900 USDC.

Coming Soon: Use Your Shares in Our dApp

In the future, you’ll also be able to use your vault shares directly in our dApp for additional functionality, such as collateral in other strategies. Stay tuned for updates!