Spot and 1x long
Every asset in the reserve is held one of two ways. Both give the same dollar for dollar exposure.
Spot#
Where Hyperliquid lists a spot token for the asset (UBTC, UETH, HYPE, UZEC, USOL and similar), the fund simply holds that token on HyperCore. This is the default, and the only mode allowed in HYPE5.
Fully backed 1x long#
Some markets, such as the S&P 500 or Brent oil on HIP-3 dexes, trade only as perpetuals. For those the fund posts the full position value in USDC as margin and opens a long of the same size at 1x leverage, in isolated margin.
| Asset moves | Spot holding | 1x long |
|---|---|---|
| +10% | +10% | +10% |
| −10% | −10% | −10% |
| −50% | −50% | −50% |
Why it is not liquidated#
At 1x the position's equity always equals its size times the price, and the maintenance margin is a small fraction of that. Equity cannot fall below maintenance except as the price approaches zero. Each leg is isolated, so one market's loss can never touch another leg's margin, and each keeps a little extra margin for funding.
The one difference: funding#
Perp positions pay or receive funding every hour. Longs usually pay in rising markets and can receive in falling ones. Funding flows straight into NAV because NAV reads the account's equity, so it is always reflected in the token price.
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