NAV, decay & funding

A leveraged tracker is not a stock at 5×. Three forces separate it from the naive multiple, and all three are worth understanding before you rely on one as a floor.

NAV

A tracker's NAV is its backing — its share of the master account's equity on Hyperliquid, plus the USDC sitting in its vault, plus any USDC on its way between the two — divided by its supply. The keeper computes it, signs it with its ed25519 key, and posts it to the tracker's vault, where anyone can read it; mint and redeem are open at it — which is the arbitrage that keeps the traded price and the NAV together.

Everything the platform quotes in dollars for a bonded coin passes through NAV. It is the one number that turns "so many trackers" into "so many dollars".

The signature covers the vault's own account id, the NAV, the tracker's share of hedge equity, the underlying's price and a timestamp, so a post for one tracker cannot be replayed on another. Anyone may relay a post; only the keeper's signature is accepted. Timestamps must strictly increase and may not be more than 5 minutes in the future, and a NAV of zero cannot be posted.

The vault refuses a stale NAV rather than act on it: if no fresh post has landed within the vault's max_staleness_secs, minting and redeeming that tracker stop until one does — and so does a coin's bond onto it. The staleness window is set per vault when the tracker is created; the deployment runbook's default is one hour (the Avalanche version used 15 minutes), and it can be read in peek_nav() as stale. The keeper being ported to NEAR posts at least every 4 minutes, and sooner when NAV moves by 0.05%. Before a tracker has bonded, its NAV is pinned at exactly 1.0 and no post is read at all. The keeper also refuses to post when its own books of dollars in transit, or its per-tracker ledger inside the shared account, cannot be reconciled with the venue and NEAR: a NAV it cannot stand behind is not posted.

Minting also stops below a floor, the vault's min_nav (0.01 in the deployment defaults): nobody buys into a wiped-out tracker.

Hyperliquid does not close, so NAV keeps moving on nights and weekends — and the price can still jump when an underlying's home market reopens.

Volatility decay

A constant-leverage tracker rebalances to keep its multiple. That is what makes the multiple hold day to day, and it is also what makes it lose ground on a round trip.

Take an underlying that falls 10% and then rises back, against a 5× tracker:

underlying:   100 → 90 → 100          net  0%
5× tracker:   100 → 50 → 77.8         net −22%

The stock is unchanged. The tracker is down 22%. Nothing malfunctioned — this is the arithmetic of constant leverage, and it applies to every leveraged product that has ever existed. A lower multiple decays less; at 1× there is no rebalancing and no decay.

The keeper does not rebalance on every tick: it lets leverage drift within a band of 20% around the target (4× to 6× for a 5× tracker; the vault's leverage_band_bps, 2000) before trading back, which trades less often at the cost of a looser multiple.

A tracker is not a long-term store of value. The more the underlying chops, the more it costs. If you are holding a bonded coin because you like where the stock is going, that thesis has a clock on it.

Funding and fees

The position lives on Hyperliquid, and carrying it costs the tracker in a few ways. All of them are paid out of the tracker's own share of the master account, or out of what arrives — so they show up as drag on the NAV, not as a charge on your swap.

• Funding — settled every hour between longs and shorts on the same market, at the rate Hyperliquid publishes for it (the xyz markets use HIP-3's premium formula with a multiplier of 0.5). When longs pay shorts, a long tracker pays and a short tracker earns; the other way round when the rate is negative. A long and a short tracker on the same market net inside the shared account and pay nothing between them.
• Trading fees — small, but not zero. Most xyz markets run in trade.xyz's "growth mode", with fees cut by 90% or more: about 0.45 to 0.9 basis points per taker trade on the S&P 500, Nvidia and crude (read 2026-09-25). Gold and Strategy are not in growth mode and pay the full fee, about 4.5 basis points times the deployer's scale. The keeper's rebalancing trades — whenever backing arrives or leaves and whenever leverage drifts out of band — pay these fees plus the spread they cross.
• Moving money — each leg through NEAR Intents 1Click costs something. Dry quotes on 2026-09-25: 100 USDC out became 99.68 on Hyperliquid, and 100 USDC back became 99.78 on NEAR, the way back including Hyperliquid's flat 0.2 USDC transfer fee. Most of that is a 0.25% fee 1Click charges quotes made without a partner key, which the protocol plans to request (stablecoin routes near 0.01% with one). None of these costs has been measured with money yet. Gas on NEAR is paid by the operator, never out of a vault.
• Liquidation — if the account were liquidated, Hyperliquid's own liquidation rules and costs apply on top of the loss. The keeper's job is to de-lever long before that.

At 5×, all of it is levered: a rate that looks negligible on a spot position is five times that against the margin behind a tracker.

The tracker vaults themselves can charge a mint fee, a redeem fee and a yearly management fee, each within hard caps written in the contract (5% on a mint or a redeem, 5% a year of management fee). The deployment runbook creates trackers with 0.1% on a mint, 0.1% on a redeem and no management fee; the owner can change them within the caps, and any change is an on-chain event. state() on a vault returns the current values as fees_bps.

What this means for a coin's floor

The backing behind a bonded coin is a leveraged position, and it moves like one. It can be worth much more than the dollars that went in, and it can be worth much less. It is not a stablecoin reserve and nothing here pretends otherwise.

What it is, is real, on a venue with public prices and public accounts, sized from dollars you can trace leaving the tracker's vault on NEAR, crossing to Hyperliquid, and being paid back into it. See the hedge book.