Inside Hyperlend: Building a Lending Protocol on Hyperliquid | Ness

Ness from HyperLens discusses the integration of HyperLens into the HyperLiquid ecosystem, highlighting the importance of precision and execution during market volatility. Since launching on Mainnet, HyperLens has processed approximately $19 billion in volume, with a total market size of $500 million. The conversation addresses the lack of grants or incentives from HyperLiquid for new projects, which has led some teams to leave due to insufficient traction or funding, although committed teams are expected to be rewarded in the long run.

Ness notes that HyperLiquid is built on Aave v3, emphasizing its scalable infrastructure as a key advantage over Morpho, which has faced risk management issues. HyperLiquid has opted for a one-to-one copy of Aave's design to prioritize safety, with ongoing discussions about adopting Aave v4 while maintaining security as a priority. The risk management team, Block Analytica, evaluates interest rates to keep them competitive, with HyperLend offering supply rates that are double those of competitors.

The user experience for borrowing against L1 positions is streamlined, though interest in the Liquid HLP product has waned due to inconsistent yields. Future plans include allowing USDC deposits and creating an isolated pool for USDC borrowing. Market interest in collateralizing HLP has diminished, prompting a shift in focus away from HLP, which now primarily supports large positions. A recent token generation event was successful, and future incentives will include a unique staking utility to help users save on borrowing costs.

HyperLinux's rebate calculation method is based on borrowing and staking amounts, with a 20% reserve factor from all loans contributing to its revenue. The team aims to reward active users similarly to HyperLiquid's revenue-sharing model. They believe that reducing borrowing rates will keep borrowers engaged post-incentive programs, although they currently have no plans to taper aggressive fee reductions as the platform scales.

The platform features six user-friendly tiers with rebates ranging from 20% to 80%, designed for simplicity. The team opted against time-based lockups for staking HPL to maintain user freedom and flexibility. In discussing competition, Ness acknowledges other players in the Hyper-EVM space, such as BLP, but views HyperLend as complementary to HyperLiquid and BLP, asserting that competition is not a concern due to strong user traction and competitive rates.

Ness confirms interest in tokenized equities, suggesting a pool market structure for spot equity, pending risk management decisions. They highlight the importance of promoting staking utility and targeting high-net-worth clients, alongside a partnership with Hyperion focused on private credit markets and regulatory compliance to attract institutional clients. The introduction of HyperLens, a dashboard for insights on HyperLend's utilization and financials, is also discussed, with favorable borrowing options allowing up to $10 million at rates under 1%.