Single-sided liquidity
Deposit one token, keep its price exposure and earn LP income. The vault borrows the other token, pools both and re-sizes the loan after every trade.
Updated Nov 9, 2026
Single-sided liquidity lets you earn like a liquidity provider while holding just one token. Deposit, say, META into the market's hedged vault and you get hLP, a share of that vault.
Your hLP moves with META's price, earns LP income on about twice your deposit, and pays interest on the half the vault borrows. Each market has two vaults, one for each of its tokens.
How it works
Two-sided liquidity drifts as the price moves: the pool sells the token that rises and buys the one that falls, so you end up holding less of the winner. That drift is impermanent loss. The hedged vault removes it with leverage inside the market:
- Borrow. The vault borrows USDC from the same market, as much as your META is worth.
- Pool. It adds your META and the borrowed USDC as two-sided liquidity, so your deposit supplies twice its value in liquidity: 2× leverage.
- Rebalance. The loan always equals the vault's USDC, so the two cancel and what is left is your META. After every trade the vault re-sizes the loan to its USDC at the new price, borrowing more when META rises and repaying when it falls.
The META held for you is the same at every price. A loan taken once and never rebalanced would fall behind simply holding META whichever way the price moved: about $17 behind at $70 and $25 behind at $30 here. The program rebalances inside every trade, with no keeper and no extra transaction.
On a concentrated market the USDC side is not always half, so the leverage drifts from 2×, but the loan still matches it exactly.
Borrowing more needs cash. If the market runs short of USDC, the vault cannot complete the rebalance on the way up, and the unhedged part waits as residual exposure until cash returns.
What you earn and pay
The vault's liquidity earns swap fees and interest like any srLP. The loan pays interest at the market's borrow rate: that is your funding cost, and it goes to the market's other LPs, never back to the vaults. When income beats funding, hLP beats holding the token; when funding wins, the difference comes out of your deposit.
- Hold META
- srLP
- Base hLP
- Base hLP against holding META
- +8% a year
Depositing
Pick a vault
On Earn, each market lists its base and quote vault with the current yield net of funding, the vault's size and the room left for new deposits.
Enter an amount
Deposits are admitted only if the vault's projected loan fits inside the borrowed token's available cash. The form shows the limit and disables the button when a deposit would not be admitted, when the market has not started, or when it is in reduce-only mode.
Confirm
One transaction mints hLP against the vault's net asset value. Your yield account for the vault is created in the same flow.
Net asset value and rates
The app shows the vault's NAV per share, the price of one hLP in the token you deposited. It rises with income, falls with funding, and moves with the token because the vault holds it. The funding rate shown is the borrow rate the vault pays, averaged with a twelve-hour half-life; the net yield subtracts it from the fee yield the vault has earned.
Interest borrowers have not yet paid is not counted in the vault's value; it reaches holders as it is paid. Harvests pay out of available cash, and a preview cannot guarantee that enough cash will still be there when the transaction lands.
Withdrawing
Withdraw burns hLP: the vault removes your part of its liquidity, repays the matching part of the loan, settles any interest owed and returns the rest to you in the token you deposited. Like every withdrawal in a market, it needs cash on the borrowed side to settle; when that side is heavily lent out, a withdrawal can wait.
hLP orders
Two orders can be attached to an hLP position and executed by keepers:
| Order | Triggers when | Result |
|---|---|---|
| Stop-loss | NAV per share falls to your level | Withdraws your shares to the token you deposited |
| Stop-rate | The twelve-hour funding average rises to your level | Withdraws your shares before funding eats the yield |
While an order is open your shares are escrowed but keep earning; the executor takes a 5% bounty from the withdrawal output, rounded up, plus the flat 10 bps protocol order fee, before your minimum-output check applies.
When funding wins
Funding is paid out of the vault's own equity. If it outruns income for long enough, the loan can grow past the vault's claim on the borrowed token. Swaps that supply the borrowed token then earn a bounded recovery discount, and a keeper can close the gap with an atomic hLP flash fill: it receives the vault's backing and pays the quoted debt-token amount in the same transaction.
Ordinary swaps stay available while a distressed vault is frozen; its automatic rebalancing pauses until it recovers.
If the vault becomes insolvent at both the live curve mark and symmetric EMA, a full native or flash closeout can retire its liquidity. It allocates funded principal losses to junior backing first and senior backing second, and cancels unpaid interest. Already funded holder yield stays accounted for.
A closeout depends on a caller and available execution; it does not happen automatically.
Related
- Two-sided liquidity: srLP, the vault's own building block, and where LP income comes from.
- Leverage and hedging: the vault's accounting and recovery rules.
- Keeper roles: who executes hLP orders and closeouts.