Hyperliquid prepares portfolio margin upgrade to boost capital efficiency for large traders

Hyperliquid, in an official announcement, has informed users of its latest market position on trade. According to the team, “Portfolio margin will transition from pre-alpha to alpha phase on the next network upgrade.”

As per the announcement, Hyperliquid aims to cater to traders who want to make larger trades without having to lock up as much capital. This will enable traders to hedge risk across multiple positions in their portfolios.

What is Hyperliquid’s portfolio margin?

According to Hyperliquid,” portfolio margin accounts automatically earn yield on all borrowable assets not actively used for trading.”

Portfolio margin offers the ability to use functionality like the carry trade, where the balance is offset by a short position in perps, collateralized by the balance in the spot account. 

The pnl of the balance and the perps offset each other, protecting against liquidation of the position in the perps market. In addition, spot and perps can be traded from a unified balance.

Portfolio margin avoids bringing a full-fledged lending market into HyperCore, as it is best left to independent teams building on the EVM. It is a complex technical upgrade and requires bootstrapping the supply side for borrowable assets.

Portfolio margin accounts return to non-portfolio margin behavior when the caps are hit. In pre-alpha, only USDC is borrowable, and HYPE is the only collateral asset. USDH will be added as borrowable and BTC as collateral prior to the alpha phase, which will be added to the docs.

For assets eligible for portfolio margin, their LTV ratio ranges from 0 to 1. The assets borrowed incur continuous interest accruals, which are then indexed every hour to coincide with the perp funding interval. Interest on borrowed and idle assets for portfolio margin users is paid at the same rate.

How will the portfolio margin work for traders?

Based on the above development, rather than specifying the collateral requirements for each individual trade, the system will be able to determine the net collateral requirement based on the portfolio’s risk level. This will enable users to back multiple positions with less capital.

The feature is expected to transition from the pre-alpha phase to the alpha phase in the next network upgrade, meaning users will no longer be restricted to using it only on their test accounts.

“Users will be able to borrow up to 1M USDC or USDH against their spot HYPE or spot BTC. This unlocks an unprecedented amount of capital efficiency and yield opportunities for borrowers & lenders,” Hyperliquid follower Steven.hl said on X.

However, access to portfolio margin will be granted only to master accounts with more than $5 million in weighted trading volume. This is intended to ensure only those with experience use the system.

In addition, to address the additional risks associated with a portfolio margin model, Hyperliquid will put in place limits on the amount of a given asset that can be supplied or borrowed globally and per user. 

In terms of stablecoins such as USDH or USDC, for example, these will be subject to global supply and borrowing limits of 500 million and 100 million, respectively, while users will be limited to 5 million for supply and 1 million for borrowing.

Hyperliquid whales shift focus to oil

The recent upgrade comes as whales move to trade oil amid global tensions. As reported by Cryptopolitan, oil trading on Hyperliquid has continued to accelerate, with two contracts now active. The entity now offers Brent and WTI oil trade through HIP-3 and the XYZ exchange. The two futures became active in the last week as oil broke through $90.

Whales are making even more daring bets on oil price expectations. The Iran war and damage to the global supply chain created expectations for higher oil prices in the summer. Oil is still a risky trade, as prices can be tempered by releasing reserves.

Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free.