> For the complete documentation index, see [llms.txt](https://docs.loopingcollective.org/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.loopingcollective.org/products/loopedhype/product-mechanics.md).

# Product Mechanics

<figure><img src="/files/PHuVku1B555BcoRLr9Cc" alt=""><figcaption><p>How LHYPE works</p></figcaption></figure>

\
Example:

1. **Deposit Asset:** A user deposits 200 HYPE and receives \~200 newly-minted *LHYPE* in return, minus the gas & execution fees to execute the transaction.
2. **Execution Fees:** Slippage fees are included in the price when minting & redeeming. loopedHYPE earns no profit from the minting or redeeming of *LHYPE*.
3. **AutoLoop:** The Risk Curator oversees AutoLoop, which stakes the underlying HYPE into a Liquid Staking Protocol (i.e stHYPE), receives stHYPE, then supplies it to a decentralized lending protocol, borrows HYPE against stHYPE, and stakes HYPE again. This strategy is recursively executed up to 15x.
4. **Risk Management:** The Risk Curator calibrates AutoLoop to rebalance the position daily. Based on the current market conditions, the multiplier is adjusted for the most efficient and safest looping strategy.

Below is a **GitBook-ready section** you can drop directly into the docs. I’ve kept it structured, explicit, and consistent across vaults.

## Technical Implementation

### Withdrawal Mechanics

#### LHYPE → stHYPE

**Overview**\
LHYPE withdrawals are allowance-based, time-bound, and resolved by Paxos Labs. Only one request can be active at a time.

**Key Mechanics**

* **Request submission:**
  * Submitting a new withdrawal **replaces the previous request**.
  * Only **one active request** is allowed at a time (**stHYPE**).
* **Asset handling during withdrawal:**
  * **LHYPE remains in your wallet** while the request is pending.
  * Once resolved, **LHYPE is burned** and you receive **stHYPE**.
* **Cancellation:**
  * You can cancel a withdrawal by **removing the allowance**.
* **Timeouts:**
  * Withdrawal requests **expire after 5 days**.
* **Settlement:**
  * Requests are **solved by the Paxos team**.
* **Fees:**
  * A **4 bps withdrawal fee** applies to prevent excessive arbitrage.