wLLP

what is wLLP

wLLP is Wick's liquid wrapper for the Lighter Liquidity Pool (LLP), Lighter's protocol-level insurance fund and liquidation backstop. Users deposit USDC, receive wLLP, and gain tokenized exposure to the yield generated by LLP.

Deposit USDC, earn auto-compounded insurance fund yield, and keep the position liquid across DeFi.

Raw LLP exposure is useful, but it is not ideal as a DeFi building block. wLLP turns that insurance-fund position into a transferable token that can be held, paired, used as collateral, routed into strategies, or moved into other markets while the underlying USDC continues working inside Lighter's risk engine.

the LLP insurance fund

The LLP (Lighter Liquidity Pool) is the backbone of Lighter's risk engine. It acts as the counterparty of last resort across all markets: absorbing liquidated positions, collecting liquidation fees, and backstopping ADL events.

LLP collateral is allocated across strategy buckets such as crypto perpetuals, FX, and real-world assets. strategy isolation: losses in one bucket are capped to that bucket's allocation and do not spill directly into the others.

When a strategy's allocated collateral is fully depleted, that strategy enters auto-deleveraging (ADL). The point of the bucket design is simple: the insurance fund can support multiple market groups without treating every risk as one shared LLP bucket.

how LLP earns

LLP earns because it supplies capital to Lighter's liquidation system. When trader account health deteriorates, Lighter moves through a liquidation waterfall. LLP collects fees when accounts are partially liquidated and can take over full-liquidation positions directly.

The yield comes from the work LLP performs inside the risk engine. During partial liquidations, LLP can receive up to a 1% liquidation fee when unhealthy accounts are reduced. During full liquidations, LLP can take over positions directly and earn if those positions close favorably. More volume, leverage, and market activity can create more events for the insurance fund to serve, but returns remain variable.

how wLLP compounds

wLLP packages the LLP position into one liquid token. Instead of manually managing an insurance-fund deposit, users hold wLLP while yield accrues into the token's USDC redemption value.

The lifecycle is simple:

1. deposit USDC into the LLP strategy when deposit capacity is available
2. receive wLLP as a liquid tokenized claim on the position
3. earn automatically — fees and takeovers compound into redemption value
4. exit when needed — redeem for USDC or swap wLLP on supported markets

The important ratio is wLLP to USDC, not wLLP to LLP. Users think in USDC terms: deposit USDC, hold wLLP, redeem for USDC plus any auto-compounded yield.

wLLP capacity

Anyone can deposit USDC into wLLP when the insurance fund has open capacity. You do not need to hold wLIT or sWICK to participate.

What sets the ceiling is wLIT supply: for every 1 LIT staked through wLIT, the system unlocks up to 10 USDC of insurance-fund deposit capacity. More wLIT in circulation means more total room for wLLP.

Holding sWICK increases how much wLLP you can deposit. Your allowance scales with sWICK holdings and whatever wLLP capacity remains open.

The same staked-LIT position that sets wLLP capacity also supports lower fees for sWICK holders and Wick arbitrage. See wLIT.

why wLLP matters

wLLP matters because it turns insurance-fund participation into a usable DeFi asset. Users get USDC-denominated yield without taking directional exposure to a volatile farming token, and the yield rolls into the redemption value automatically instead of requiring manual claims or restakes.

The returns come from Lighter's LLP pool: liquidation fees, position takeovers, and other insurance-fund work that LLP performs with pooled USDC. wLLP matches that performance on Wick so holders can stay liquid while the underlying USDC works inside Lighter's risk engine.

The underlying LLP uses strategy buckets, so a loss in one market group does not automatically drain the whole fund. Returns are still variable: individual months can be negative when losses outweigh liquidation fees and profitable takeovers.

Because the wrapper is tokenized, the position can be held, transferred, paired against stables, accepted as collateral, or used in vault strategies.

how wLLP fits into Wick

wLLP is Wick's USDC yield leg: a stable, composable asset that sits beside wLIT and exchange products without adding directional token exposure.

wLLP generates revenue for Wick in three places:

• wAMM pools. wLLP paired against USDC and stables on wAMM generates dynamic swap fees on exchange activity
• Protocol fee. Wick takes 10% on wLLP reward compounds, allocated to sWICK buybacks
• External use. wLLP used as portable collateral on Lighter EVM lending markets, other networks, exchanges, and third-party venues keeps accruing LLP yield and generates additional Wick revenue

Deeper Wick pools and more wLLP volume raise exchange fees and the underlying LLP position Wick operates. The 10% compound fee and revenue from external composability route to sWICK buybacks. For how dynamic fees protect LPs on those pools, see concepts. Usage outside Wick is not passive: collateral in lending markets and integrations on other venues adds yield surface area and fee capture without requiring holders to exit the token.