The Pit

The Pit is one HYPE vault that takes the other side of every Shortcap market. It is the same model as GLP: depositors are the house.

Mechanics

• deposit() takes HYPE and mints PIT shares.
• withdraw(shares) burns shares and returns HYPE, once the cooldown has passed.
• Markets call the Pit, and only markets created by the registry can.

Share accounting

share price = HYPE held by the Pit ÷ PIT supply
shares minted = deposit × PIT supply ÷ HYPE held before the deposit

The share price moves with realized results only: fees received, trader losses received, trader profits paid. Open positions are not marked into it. The Pit page shows their aggregate unrealized P&L as "open exposure".

Cooldown

Withdrawals open 24 hours after a wallet's last deposit. PIT shares are a token and can move, but a transfer carries the sender's lock to the receiver. Moving shares does not skip the cooldown.

What depositors earn

• 50% of every open and close fee, in every market.
• The losses of traders who close or are liquidated below their entry.
• Net funding: when the paying side is larger, the difference goes to the Pit.

What depositors carry

• The profits of traders who close above their entry.
• Net funding when the receiving side is larger.
• Bad debt the insurance fund cannot cover.

A crowd that is right and one-sided, for example everyone shorting a token that then collapses, is a drawdown for the Pit. The 5x cap, the open-interest caps and the insurance funds limit it. They do not remove it.

The Pit is Elysium's native HYPE yield product. It can lose HYPE.