# Canonical: https://www.uddalak.xyz/hyperliquid-academy/article/76-user-created-vaults-vs-hlp
# Author: Uddalak Das
# Last source: https://www.uddalak.xyz/hyperliquid-academy/article/76-user-created-vaults-vs-hlp

---
title: "User-Created Vaults vs HLP on Hyperliquid"
description: "HLP is a protocol vault with defined system roles, while user-created vaults are strategy vehicles run by individual leaders; they share a vault interface but not the same mandate or risk."
pillar: "Capital & DeFi"
track: "Capital & DeFi"
cluster: "Capital & DeFi"
level: "Intermediate"
primary_icp: ["DeFi-native user", "trader"]
secondary_icp: []
content_type: "comparison"
reading_time: "3 min"
last_reviewed: "2026-09-07"
last_verified: "2026-09-07"
volatile: true
prerequisites: ["33-hlp-vaults"]
related: ["77-vault-leader-risk-lockups-withdrawals"]
---

# User-Created Vaults vs HLP on Hyperliquid

Hyperliquid vaults let capital follow a trading strategy, but HLP and user-created vaults should not be treated as interchangeable yield products. HLP is the protocol vault involved in activities such as market making and liquidations. User-created vaults are led by individual accounts whose strategies, concentration, and execution quality can differ materially.

## What HLP does

HLP aggregates deposited capital for protocol-defined liquidity and market activities. Hyperliquid documents market-making and liquidation-related roles, as well as specific deposit and lock behavior.

Its return comes from the trading and liquidity activities performed by the vault, not from a guaranteed protocol interest rate.

## What a user vault does

A user-created vault delegates trading authority to a vault leader under the vault system. Depositors participate economically in the leader's strategy according to the vault rules.

The protocol provides infrastructure, but it does not make the leader's strategy prudent. A high historical return can be the product of leverage, concentration, favorable market regime, or hidden tail exposure.

## Lockups and liquidity

HLP and user-created vaults can have different withdrawal lock periods. A depositor should compare the lock with the strategy's risk horizon and their own liquidity needs.

A short historical PnL chart is not a substitute for understanding whether capital can be withdrawn during a stress event.

## How to compare vaults

Evaluate drawdown, turnover, concentration, leverage, market exposure, fee structure, lock period, leader history, and whether returns persist across different volatility regimes.

For HLP, understand the protocol roles that generate PnL. For a user vault, understand the leader's observable positions and behavior. “Vault APY” alone is not an adequate risk metric.

## How this connects

Start with [HLP and HyperCore Vaults Explained](/hyperliquid-academy/article/33-hlp-vaults) if the underlying concept is unfamiliar. Related reading: [Vault Leader Risk, Lockups, and Withdrawals on Hyperliquid](/hyperliquid-academy/article/77-vault-leader-risk-lockups-withdrawals).

## Sources

- https://hyperliquid.gitbook.io/hyperliquid-docs/hypercore/hyperliquid-liquidity-provider-hlp
- https://hyperliquid.gitbook.io/hyperliquid-docs/hypercore/vaults