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On the liquidity side, Hotstuff L1 extends the “retail vault MM” idea pioneered by HyperLiquid HLP, but removes the single-venue and capital-inefficiency constraints that keep vaults small today.

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Hedge Mode for Capital Efficiency

The Hotstuff Liquidity Vault (HLV) runs in hedge mode with per-account netting, so it can quote both sides of the book across all markets while only blocking margin on net delta plus a dedicated liquidator sleeve.
FeatureBenefit
Both sides of bookQuote across all markets simultaneously.
Net delta marginOnly block margin on net exposure.
Liquidator sleeveDedicated risk management buffer.
Capital efficiency~50% improvement versus one-way vaults.

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Trustless Access to Multiple Venues

HLV is designed to act as a multi-venue market maker. Recent innovations in the space have opened up gateways for trustless access to external venues. HyperLiquid itself is now a valid on-chain venue; major CEXs like Binance and Deribit support asymmetric API keys.
Venue TypeIntegration Method
Hotstuff L1Native on-chain.
HyperLiquidValid on-chain venue.
Binance, DeribitAsymmetric API keys.
Through DKG-generated EdDSA/ECDSA keys, HLV can quote simultaneously on Hotstuff, HyperLiquid, and supported CEXs, while DracoBFT auxiliary loops ingest mark-to-market and risk data in near-real time. Rebalancing and basis trades follow the same trust model that already underpins large CeFi-to-DeFi systems (for example, off-exchange MPC clearing for USDe). The result is a vault architecture that can behave like a real multi-venue prop/MM desk, sourcing liquidity where it is deepest and routing it back to Hotstuff L1, rather than being confined to a single orderbook.

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Packaged Strategies

Over time, that vault logic generalizes into packaged strategies:
  • Basis trading
  • Funding arbitrage
  • Cross-venue relative value
These strategies give users DeFi-native yield while bootstrapping Hotstuff books.

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CEX Integration Model

HLV is designed to adopt Ethena styled off-exchange custody model using MPC clearing solutions (Copper ClearLoop, Ceffu) to minimize custodial risk. Trade-offs accepted by vault depositors:
  • CEX custody risk.
  • Auto-deleveraging risk.
  • Consensus-induced latency (precludes HFT, enables passive MM).