An onchain lending protocol is a system of smart contracts that facilitates the deposit and transfer of digital assets. HypurrFi is an overcollateralized supply and borrow model. Users supply assets to liquidity pools and other participants can borrow from those pools. Supplying assets to pools acts as collateral, which permits users to borrow from the pools up to a collateralization limit.

HypurrFi is currently only available on the Hyperliquid EVM testnet blockchain, and features supplied Hyperliquid-native assets for lending and borrowing. Additional bridged assets form other chains will be available to lend and deposit as they become available on Hyperliquid.

HypurrFi is non-custodial, meaning users maintain control over their assets at all times. No person or team associated with HypurrFi has possession or control of any user’s assets.

Interaction with the protocol happens through self-custodial wallets, allowing users to supply or borrow funds directly, without relying on intermediaries. All of this is managed through publicly accessible and permissionless smart contracts, which execute and verify transactions based on predefined conditions, such as collateral ratios and market parameters.

This is fundamentally different from Fintech or banking finance. Users themselves make decisions when to supply, borrow, and at what risk ratios. Users can withdraw from positions at any time as long as they fulfill the smart contract requirements. For example, if the user deposits assets to lend, then borrows another asset, the smart contract requires that the user pays back the borrowed asset before withdrawing their lent assets.

The permissionless nature of HypurrFi means that users are subject to risks and rules of the smart contracts. Before using HypurrFi, users should familiarize themselves with overcollateralization requirements and mechanisms, liquidation risks, and how yield is distributed according to dynamic demand in the system.

HypurrFi will be governed by a decentralized network of users. Additional information on governance structure is forthcoming.

The main feature HypurrFi users will engage with is the ability to self-custody digital assets while earning leveraged price appreciation on those assets. Users can deposit an asset, take out a stablecoin loan, then use the stablecoins to buy more of the original deposited asset from an exchange, providing 2X leverage on the asset’s price volatility.

In the future, users will also have the ability to mint the USDXL stablecoin. Users deposit digital asset collateral and gain the ability to borrow/mint USDXL against that collateral. USDXL is a U.S. Dollar-denominated stablecoin that can be used across Hyperliquid EVM applications and other blockchain systems in the future.

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