Inside Hyperlend: Building a Lending Protocol on Hyperliquid | Ness

Ness from Hyperland discusses the company's journey in the crypto space since March 2020, emphasizing their attraction to Hyperliquid for its precision in trade execution during volatile market conditions. The decision to build on Hyperliquid was influenced by its potential and discussions about DeFi's role in Ethereum's growth, with Ava recognized for providing scalable infrastructure.

Hyperland has processed around $19 billion in volume and maintains a market size of $500 million. However, challenges within the Hyperliquid ecosystem include a lack of support, leading to high-quality teams remaining committed while others have left due to insufficient traction. Ness highlights a preference for OVE's scalable infrastructure over Morfo, citing risk management concerns.

No changes have been made to Hyperliquid's protocol design, ensuring the safety and security of the HyperEVM. Ongoing discussions about adopting AaveV4 focus on security before scaling, with interest rates managed by the Respanagement Team to ensure competitiveness. User experience improvements are in progress, including features for seamless L1 to EVM transactions and plans for unique offerings aligned with Hyperion.

The liquid HLP product initially gained popularity, but interest has waned due to inconsistent yields. Future enhancements include allowing USDC deposits and creating an isolated borrowing pool, with HLP's role shifting towards backstopping large positions, which poses risks for investors. The recent token generation event includes plans for a unique staking utility to help users save on borrowing costs, with a conservative approach to token distribution for incentives.

The revenue model includes a 20% reserve factor from all loans, with a portion of earnings returned to active users as incentives. For example, a user who staked $2,000 could save around $40,000 annually. The team remains focused on reducing borrowing rates rather than supply rates, with no plans to taper off aggressive fee reductions. They operate with a lean team of six, prioritizing product development over immediate cash flow.

The tier structure for rebates is designed for simplicity, with six tiers on the website, but rebates are calculated on a concave linear formula, ranging from 20% to 80%. This system aims to create a sense of achievement for users. Currently, there are no lockups for staking HPL, as the team opted against time-based locks to maintain users' financial freedom.

Ness acknowledges competition from other protocols like Hyperliquid and BLP but sees their offering as complementary, focusing specifically on lending and borrowing. Plans to tokenize positions typically found on BLP are underway, with an interest in tokenized equities. The primary goal for the next 6 to 12 months is to raise awareness about their staking utility and its benefits for scaling large positions.

A recent partnership with Hyperion aims to enhance private credit markets and regulatory compliance, expected to attract institutional clients. The discussion also touched on Hyperlens, which features a comprehensive dashboard for financials, markets, and rates, along with advisory services.