Monday explorations: tokenized HLP Preface I'm writing this as an outsider to HyperLiquid. Most people go through a trader phase. Mine coincided with HL's points program. Like everyone I received what felt like a large HYPE allocation, though I have since cashed out >50% without regrets. More recently I quit directional trading. Partly because I am a mediocre trader and partly because I need mental clarity to build @objectivedefi. So I'm not a whale, maxi, or even a core user of HL. Yet I have been following its developments closely: it's hard to ignore. I have become especially interested in the HyperEVM and tethers between HyperLiquid and broader DeFi. I see HLP playing a key part of that development. The HLP Vault HLP (Hyperliquidity Provider) has always been one of my favorite features of HyperLiquid. It is a community vault that pools USDC for market making and liquidations on the exchange. On most days HLP earns stable yield from fees. HLP's best days have been in periods of high volatility, especially during flash crashes. Of course HLP can also lose money (see $JELLY), so it's not risk-free. HLP is great because its returns aren't correlated with the other major sources of stablecoin yield, T-Bills and money markets. Diversification is a good thing because it makes your overall portfolio more resilient to shocks (you probably need to hear this). Most exchanges hire market makers privately. Some say this model is inherently bad, taking it as evidence of manipulation or at least ill intentions. I don't agree: private market making obviously works and the firms that do it take risks to provide the service. Sure, we often hear allegations against market makers, but remember that nobody complains when you do your job well. What we know for sure is that HLP's orders, exposure, and PnL are fully transparent and the vault is open to everyone. HyperLiquid democratizes market making by letting ordinary users share the upside (and risk) of an activity that is usually reserved for professionals. HL also doesn't cut private market-making deals. Professional market makers are invited to the party but they must compete at fair grounds. Several firms, big and small, already do. Tokenized HLP We've established that HLP is an uncorrelated source of real yield. But what good is yield without distribution? Until recently the only way to participate in HLP's upside was to lend directly to the vault. Now there are several teams building HLP wrappers to connect it to DeFi. Tokenizing HLP solves a couple of problems. First and foremost, it makes HLP available on general-purpose EVM chains. Represented by an ERC-20 token, HLP can be paired on DEXes for instant liquidity (HLP has a 4-day withdrawal delay). Tokenized HLP can be listed on lending markets to enable looping. This is a huge unlock as leverage allows users to scale into HLP with a reduced cost basis. As these HLP wrappers mature I expect HLP to be onboarded as collateral on more lending markets, first on HyperEVM, and then on other EVM networks. Projects tokenizing HLP: @Hyperwavefi's hwHLP is the leading HLP wrapper with $9.8M TVL. It is presently only available and liquid on HyperEVM with a listing on @HypurrFi. @HLP0_to's HLP0 is a close second with $8.3M TVL. Bridged by LayerZero, it is compatible with most chains but presently only available and liquid on Arbitrum. @looping_col's WHLP is sitting at $7.2M TVL, focused on HyperEVM expansion with listings on leading lending markets. @hypertoken tHLP is an upcoming wrapper, not much information yet. Shoutout to @androolloyd and @ruvaag whose musings about HyperLiquid have shaped a lot of my thinking.