Yield

Yield Sources

Fee Income

Liquidity providers earn from multiple fee streams generated by trading activity:

Trading Fees:

• Open position fees charged when traders establish positions

• Close position fees charged when positions are exited or liquidated

• Fee rates vary by market based on liquidity depth and volatility

Borrowing Fees:

• Hourly fees paid by traders for borrowing liquidity to establish leveraged positions

• Calculated as a percentage of position size based on pool utilization

• Higher utilization increases borrow rates, incentivizing additional liquidity provision

Liquidation Fees:

• Penalties charged when trader positions are force-closed due to insufficient margin

• Compensates LPs for bearing liquidation execution risk

All fees settle continuously into the pool, increasing AUM and raising HzLP/HzV token value. Fee distribution occurs automatically without requiring manual claims.

APY Calculation

Annual Percentage Yield represents projected returns from fee income, displayed as an annualized rate with compounding. The platform presents APY derived from trailing APR data:

Fee APR isolates annualized returns from trading activity fees only (open, close, borrow, liquidation), excluding price impact, PnL, and funding. This metric provides a conservative baseline yield expectation independent of market direction.

Total APY incorporates all yield sources including trader PnL over the measurement period. This metric is more volatile due to PnL variance but reflects comprehensive returns.

$$APY_{total} = \left( 1 + \frac{APR_{Day}}{365} \right)^{365} - 1$$

Fee Distribution

Liquidity Providers LPs receive 60% of all protocol revenues. This compensates them for supplying liquidity and bearing counterparty risk against traders.

Protocol Treasury The remaining 40% of revenues accrue to the protocol treasury. These funds are reinvested into protocol growth and resilience — including protocol-owned liquidity, gas subsidies, trading competitions, trader rebates, insurance backstops for LPs, and incentive campaigns. The overarching objective is to ensure that treasury revenues ultimately flow back to benefit LPs and traders directly or indirectly.

Note that: APY is variable and not guaranteed.