> For the complete documentation index, see [llms.txt](https://docs.buoy.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.buoy.finance/getting-started/how-buoy-works.md). # How Buoy Works This page explains the moving parts of Buoy in plain language. You don't need to understand all of it to deposit — but knowing how the system settles your funds will make everything else in these docs click. ## The three roles | Role | What they do | What they **cannot** do | | ------------- | ---------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | | **Depositor** | Deposits USDC, holds Buoys (vault shares), withdraws anytime | — | | **Leader** | Trades the vault's capital on Hyperliquid, earns the performance fee | Withdraw or redirect vault funds — impossible at the contract level | | **Fulfiller** | The protocol's settlement service: values the vault, mints shares for deposits, pays out withdrawals | Send vault funds to any outside address — destinations are fixed by the contracts | ## One vault = one fund Every vault is its own isolated smart contract with: * its own **share token** — an ERC-20 named `buoy` + the vault's ticker (e.g. `buoyABC`), held directly in your wallet; * its own **Leader**, performance fee, and track record; * its own capital — vaults never share funds or risk with each other. ## NAV and share price The value of your Buoys comes from the vault's **Net Asset Value (NAV)** — the total USD value of everything the vault holds: > NAV = USDC waiting in the vault + spot balances on Hyperliquid + the value of every open perp position (including profit/loss and margin), minus any withdrawals already owed to other users. The **share price** is simply: ``` share price = NAV ÷ total Buoys in circulation ``` When the Leader trades profitably, NAV goes up and each Buoy is worth more USDC. When trades lose money, the share price falls. The very first deposit into a vault sets the baseline at **1 Buoy = 1 USDC**, so the share price doubles as a live performance index of the vault. ## Two layers: HyperEVM and HyperCore Buoy spans the two layers of the Hyperliquid ecosystem: * **HyperEVM** — the EVM chain where the Buoy smart contracts, your wallet, USDC, and your Buoys live. * **HyperCore** — Hyperliquid's trading engine, where the actual perp and spot trading happens. When you deposit, your USDC arrives on HyperEVM and is then bridged to HyperCore so the Leader can trade it. When you withdraw, capital travels back the other way. This bridging is why withdrawals can take a little longer than deposits — see [Withdrawing](/for-depositors/withdrawing.md). Inside HyperCore the vault holds **one account** that covers everything it trades — spot, the default perp DEX, HIP-3 builder markets and HIP-4 outcome markets — with a single USDC balance backing all of them. That's why a vault's whole book is visible in one place, on the vault page's **TVL** tab. ## Requests, not instant swaps Buoy vaults are **request-based**. Depositing or withdrawing is a two-step dance: ``` You Buoy contracts Fulfiller │ │ │ │ 1. Submit request (one tx) │ │ ├────────────────────────────────► │ │ request recorded, │ 2. Detects your request │ │ funds/shares escrowed ├───────────────────────────►│ │ │ 3. Values the vault (NAV) │ │ │◄───────────────────────────┤ │ 4. Shares minted / USDC paid │ settles at fair price │ │◄───────────────────────────────┤ │ ``` 1. **You submit a request** — a single transaction from your wallet. Your USDC (for deposits) or Buoys (for withdrawals) are held in escrow by the contracts. 2. **The fulfiller settles it** — it computes the vault's up-to-the-second NAV from live Hyperliquid data and executes the request at that fair price. This design guarantees everyone transacts at the vault's true current value, even while the Leader has open, constantly-moving positions. Deposits typically settle within a minute or two; withdrawals can take longer if capital needs to be freed up. Every request also carries a **slippage floor** you can see before confirming (minimum shares for a deposit, minimum USDC for a withdrawal). If the vault's value moves sharply between your request and settlement, you can never receive less than that floor. And if a request is ever left unsettled, you can **cancel it and reclaim your funds** after a timeout — see [Cancelling a Request](/for-depositors/cancelling-a-request.md). Your assets are never stranded. For the full state machines and settlement mechanics, see [Request Lifecycle](/protocol-deep-dive/request-lifecycle.md). ## The performance fee (high-water mark) Leaders are paid a percentage of **new profits only**, measured by a high-water mark (HWM): * The HWM is the highest share price the vault has ever reached. * A fee is charged only on gains **above** that mark, at the vault's stated performance-fee rate. * If the vault drops and then recovers, the Leader earns nothing on the recovery until the old high is beaten. There is no management fee, and no percentage taken from your deposits or withdrawals — the only other charge is a small flat request fee in HYPE (currently 0.01 HYPE) per deposit or withdrawal request. See [Fees](/for-depositors/fees.md) for the complete picture, or [Earning Fees](/for-vault-leaders/earning-fees.md) for how it looks from the Leader's side. A fixed slice of each performance fee (currently 10% of it) is the **referral fee** rather than the Leader's. It funds Buoy's [Referral Program](/referral-program/referral-program.md): invite someone and you earn a share of the referral fee on everything they hold; join through someone's link and part of the fee on your own deposits comes back to you — both in USDC, both claimable any time. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.buoy.finance/getting-started/how-buoy-works.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.