Portfolio margin (ne-BPL) being formally announced on @HyperliquidX testnet is a massive unlock and without doubt a must-have feature. It removes a huge amount of friction for users who today try to replicate portfolio margin using lending protocols on the HyperEVM, and it adds an additional layer of security that EVM protocols simply can’t compete with. Let’s be honest, if something truly nefarious were to happen to BPL on HyperCore, the chain state would likely be rolled back. That’s a luxury that would never be afforded to protocols living purely on the HyperEVM. So how does this affect lending protocols on the HyperEVM? The answer is fairly obvious. Portfolio margin will reduce borrowing demand on the HyperEVM where that demand existed purely to achieve portfolio margin–style outcomes. That said, at least in the short term, BPL collateral support and risk parameters will likely be more conservative than what HyperEVM protocols can offer today. Portfolio margin will only have one venue for liquidations and that will likely keep LTV's lower than what can be offered on the general purpose lending protocols. There will still be plenty of use cases that portfolio margin simply can’t accommodate, and lending protocols will absolutely continue to have a place. There are also second-order effects worth calling out. One bearish implication is for AMMs. One source of AMM volume and fees comes from lending-driven liquidations and leverage loops. As borrowing demand shifts toward portfolio margin, that activity declines. Less volume means fewer fees, which ultimately leads to thinner liquidity. There’s also a clear flow-on effect for delta-neutral strategies as a product. Portfolio margin makes these strategies dramatically easier and more capital efficient to run directly on HyperCore. It also makes them easier to tokenize natively on HyperCore, which lowers the barrier to entry for both builders and users. That said, this is far from doom and gloom for the HyperEVM. In fact, it opens up an entirely new design space: • Yield-bearing vaults powered by borrowing demand on HyperCore • HyperEVM protocols supplying idle liquidity directly into BPL • Tokenized delta-neutral strategies built specifically around a protocol’s constraints • Fully fledged lending protocols built on top of portfolio margin, with HyperCore acting as the collateral custody layer • Plenty more... The key takeaway for builders is simple. If you don’t have the ability to build and adapt quickly in this ecosystem, you will get left behind.

One of the best things a stablecoin can do is to find "sinks", a venue where the stablecoin can sit with little intention for it to ever be redeemed. These sinks allow the issuer to sit back and collect the treasury yield in perpetuity. The best sinks in crypto are exchanges where the stablecoin can be used for spot trading pairs and margin for perps. Look at USDT for example, they have roughly 30bn (if not more) sitting on centralized exchanges being used as trading pairs for spot and perps. That's roughly 1.2bn in treasury yield a year. Circle have a similar situation on Coinbase and from Circles recent IPO filing we now know that they have to share some of that revenue with Coinbase, and I'd be surprised if there isn't some form of arrangement with Tether and Binance and the other exchanges. The exchanges dont want to issue their own stablecoins because of regulatory risk and the stablecoin issuers dont want to run an exchange because its a complicated tech stack, so for now, the parties on either side have a symbiotic relationship. @HyperliquidX HIP-3 changes this. HIP-3 removes the friction for the stablecoin issuer to create their own perps exchange and potentially very soon their own spot markets too. They no longer have to worry about building a high performance decentralized exchange... Hyperliquid has already done this for them. For the last 30 years, we've had White-labeled software and then we moved into Software-as-a-Service, but the basic premise was the same... you focus on the customer relationship and branding, and let the experts focus on the tech stack. What would happend if Circle launched CircleX, a perps and spot exchange on their own, and instead of sharing their revenue with Coinbase to go back to shareholders, they share the revenue with the users trading the volume on their exchange? Or Tether could do the same... Ethena already do this if you trade margin on ByBit. What about perps with BTC as margin? When @chameleon_jeff say's they are building Hyperliquid to House all of Finance, don't think of everyone playing in the same house, think of 100's of houses with different colored doors. Hyperliquid.