Understanding stHYPE and wstHYPE in the HypurrFi Lending Market

We get some questions about W assets on HyperEVM. WHYPE for example is wrapped HYPE. This is a way to use the native gas token HYPE as an erc-20 token.

DeFi smart contracts such as AMMs or lending dapps use erc-20 tokens to maintain a consistent token standard. This lets smart contracts rely on a tested and accepted standard for how they handle and move tokens.

For many wrapped assets, the wrapping occurs in the background and the w is removed from the UI just to make it more friendly for the user. For example, on Uniswap the ETH-USDC AMM pool is actually WETH-USDC even though it says ETH on the UI.

However, some wrapped tokens are a little different from their unwrapped counterparts. stHYPE and wstHYPE are one example of this.

This post is a brief explainer of why this is the case and showcases how they are different in structure, but keep the same value accrued to each holder.

stHYPE:

• Issuer: https://www.stakedhype.fi/

• Representation: Rebasing token model (balance increases over time)

• User Experience: Quantities visibly increase with rewards

• Contract: 0xffaa4a3d97fe9107cef8a3f48c069f577ff76cc1

wstHYPE

• Issuer: https://www.stakedhype.fi/

• Representation: Yield-bearing token model (value increases while quantity remains static)

• Protocol Integration: Preferred for DeFi protocol compatibility and accounting

• Contract: 0x94e8396e0869c9f2200760af0621afd240e1cf38

Technical Explanation

The Fundamental LST Design Challenge

Liquid staking tokens face a design tradeoff between usability and technical integration:

1. Rebasing Tokens:

   • Automatically adjust token quantity to reflect earned rewards

   • Create accounting complexities for protocols due to fluctuating balances

   • Typically require separate wrapped versions for DeFi compatibility

2. Yield-Bearing Tokens:

   • Maintain static token balances while value increases relative to the underlying asset

   • Provide cleaner accounting for protocol smart contracts managing user funds and yield returns

   • Present a less intuitive user experience for monitoring streaming rewards

The StakedHype Dual-Interface Model

stakedhype.fi implements both representations simultaneously through a novel dual-interface architecture:

• Both tokens access the same underlying share data

• Actions on one token automatically reflect on the other

• No wrapping/unwrapping required between representations

• Users and protocols can interact with their preferred interface

HypurrFi Integration Specifics

HypurrFi.com, as a lending protocol on Hyper EVM, implements a specific approach to these tokens:

1. Collateral Acceptance: Accepts stHYPE as collateral from users

2. Internal Conversion: Automatically converts stHYPE to wstHYPE for internal accounting

3. Accounting Benefits:

   • Maintains equivalent collateralization with HYPE deposits

   • Ensures users continue receiving staking rewards on their collateral

   • Simplifies liquidation calculations and risk management in future markets

This approach allows HypurrFi to offer an intuitive user experience with stHYPE deposits while maintaining robust internal accounting through wstHYPE.

Valantis Rebase Support

Valantis, a Decentralized Exchange that takes special considerations for rebase token support, supports stHYPE natively in their stHYPE AMM:

1. stHYPE —> HYPE swaps: users sell stHYPE directly to the AMM for HYPE

2. Internal Handling: Valantis, unlike most DeFi protocols, measures token balances of the pool at the time of swap, deposit, and withdrawal; instead of having a fixed internal token balance. Because Valantis expects that token balances can change at any time because of a rebase, stHYPE AMM can handle stHYPE natively.

3. Accounting Benefits:

   • Traders can sell stHYPE for HYPE directly, without needing to use the wrapped version

   • Simplifies pricing of stHYPE:HYPE, since it always 1:1

   • stHYPE AMM integrates with the stHYPE withdrawal queue to rebalance itself- because stHYPE AMM handles stHYPE natively- this process is much simpler.

More information about how Valantis handles rebase tokens can be found in their Sovereign Pool Documentation

Market Impact and TVL Growth

The implementation of this dual-token model has contributed to significant ecosystem growth:

• Looping strategies with HypurrFi and partners such as loopedhype.com

• Enable users to leverage yield and points accumulation across the Hyper EVM ecosystem

• Dynamic interest rates based on market demand optimize capital efficiency

Ecosystem Development

The stHYPE/wstHYPE model is positioned to play a significant role in the Hyper EVM ecosystem:

• Collateral for USDXL stablecoin borrowing 

• Desirable borrow asset when base staking yields increase

• Continued seamless flow between staking activity on the HyperCore DEX and HypurrFi.com on HyperEVM

• Strong liquidity depth for Valantis style swaps and AMM pools

This overview explains the fundamentals of stHYPE and wstHYPE, and how they work within the Hypurr.Fi ecosystem. It also details their unique functions and the advancements they offer to the design of liquid staking tokens.

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