Portfolio margin

Testnet-only, pre-alpha mode

Under portfolio margin, a user’s spot and perps trading are unified for greater capital efficiency. Furthermore, portfolio margin accounts automatically earn yield on all borrowable assets not actively used for trading.

Portfolio margin unlocks functionality such as the carry trade where a spot balance is offset by a short perps position, collateralized by the spot balance. Spot and perp pnl offset each other, protecting against liquidation on the perp position. More generally, spot and perps trading can be performed from a single unified balance. For example, a user could also hold HYPE and immediately buy ETH on the ETH/USDH book. All HIP-3 DEXs are included in portfolio margin, though not all HIP-3 DEX collateral assets are borrowable. Future HyperCore asset classes and primitives will support portfolio margin as well.

Users can supply eligible quote assets to earn yield. This synergizes and composes with HyperEVM lending protocols. In a future upgrade, CoreWriter will expose the same supply action for smart contracts. Portfolio margin intentionally does not bring a full-fledged lending market to HyperCore, as that is best built by independent teams on the EVM. For example, HyperCore lending is not tokenized, but an EVM protocol could do so by launching a fully onchain yield-bearing ERC20 token contract through CoreWriter and precompiles. Portfolio margin introduces organic demand to borrow and should expand the value proposition of teams building on the HyperEVM.

IMPORTANT: Portfolio margin is a complex technical upgrade and requires bootstrapping the supply side for borrowable assets. Therefore, portfolio margin will launch in pre-alpha mode where borrowable asset caps are extremely low. Users should test with new accounts or subaccounts with <$1k in value. Portfolio margin accounts will fall back to non-portfolio margin behavior when caps are hit. In pre-alpha mode, only USDC is borrowable, and HYPE is the only collateral asset. USDH will be added as borrowable and BTC as collateral before the alpha phase. Details will be added to the Docs.

LTV and borrowing

Under portfolio margin, eligible collateral assets have an LTV (loan-to-value) ratio between 0 and 1. During pre-alpha, HYPE will have an LTV of 0.5. When placing spot and perp orders under portfolio margin, insufficient balance will automatically borrowed against eligible collateral up to token_balance * borrow_oracle_price * ltv , where price is denominated in the asset being borrowed.

Borrowed assets accrue interest continuously, and are indexed hourly to match the perp funding interval. Portfolio margin users pay interest on borrowed assets and earn interest on idle assets according to the same rate. During pre-alpha, the borrow interest rate for stablecoins is set at 0.05 + 4.75 * max(0, utilization - 0.8) APY, compounded continuously depending on the instantaneous value of utilization = total_borrowed_value / total_supplied_value . Earned interest is accrued proportionally to all suppliers. The protocol retains 10% of borrowed interest as a buffer for future liquidations.

Liquidations

Portfolio margin is a generalization of cross margin. Instead of margining all perp positions within one DEX together, all cross margin perp positions and spot balances are collectively margined together within one account. Sub-accounts are still treated separately under portfolio margin.

Liquidations are triggered when the entire portfolio margin account is below its portfolio maintenance margin requirement. Users can monitor this requirement via the portfolio margin ratio, defined as

portfolio_margin_ratio = portfolio_maintenance_requirement / portfolio_liquidation_value

where

portfolio_maintenance_requirement = (sum_{dex} cross_maintenance_margin(dex) + sum_{token} borrowed_size(token) * borrow_oracle_price(token))

portfolio_liquidation_value = sum_{dex} cross_account_value(dex) + sum_{borrowable_token} (balance(token) - borrowed_size(token)) + min(borrow_cap(USDC), sum_{collateral_token} (min(balance(token) - borrowed_size(token), supply_cap(token)) * borrow_oracle_price(token) * liquidation_threshold(token)))

liquidation_threshold(token) = 0.5 + 0.5 * LTV(token)

borrow_oracle_price(token) = median(HL_spot_USDC_price, HL_perp_mark_price * USDT_USDC_oracle, HL_perp_oracle_price * USDT_USDC_oracle)

USDT_USDC_oracle = 1 / HL_spot_oracle_price(USDC)

The account becomes liquidatable when portfolio_margin_ratio > 0.95. All notional values in the above definition are converted to USDC using borrow_oracle_price(token) .

During mainnet pre-alpha, the caps per user will begin at borrow_cap(USDC) = 1000 and supply_cap(HYPE) = 100. After borrow caps are hit, additional margin used must be supplied by the user using the settlement asset regardless of whether portfolio margin is active. Therefore, the best way to test the full portfolio margin behavior is to use small test accounts.

Depending on the order of oracle price updates, either perp positions or spot borrows may be liquidated first. In other words, once portfolio margin ratio is liquidatable, users should not expect a deterministic liquidation sequence.