Skip to main content

Warp Routes: Yield Routes

The goal of this guide is to illustrate how you can use Hyperlane warp routes to create yield-generating bridges, ensuring idle bridged assets are still productive by compounding yield over time.

Primary Motives​

  1. Enable yield-generating warp routes via yield-bearing collateral vaults.

Pre-Requisites​

To complete the following walkthrough, you should have the following available:

  1. An origin and destination network of choice, between which you’d like to deploy the yield route.
  2. The address of a funded ERC-4626 vault on the origin network. This vault’s underlying asset will also be set as the collateral for the warp route (e.g. if vault is USDC funded, the warp route will also support USDC transfer).
  3. An installed instance of the Hyperlane CLI and a wallet private key set as the HYP_KEY env var funded on your origin and destination networks.

Walkthrough: Create a Yield Route​

Concepts​

  • ERC-4626 Vault: The Ethereum standard for tokenized yield-bearing vaults, representing shares of an single ERC20 token of choice.
  • EvmHypCollateralVault (HypERC20CollateralVaultDeposit): The Hyperlane representation of a yield-bearing EVM collateral token. Note that the yield route’s vault’s deposited asset address is used as the warp routes collateral token.
info

For the sake of this example, the “origin” network will refer to the network on which the vault is present (e.g. yourchain is the origin with a USDC vault).

Steps​

Using the Hyperlane CLI, deploy a yourchain USDC EvmHypCollateralVault ↔ ethereum USDC EvmHypSynthetic warp route:

  1. Run hyperlane warp init and complete the following flow:
    1. Select yourchain and ethereum using space, and hit enter.
    2. For yourchain, select collateralVault, accept the mailbox, and enter the USDC vault address on yourchain.
    3. For ethereum, select synthetic and accept the mailbox.
  2. Run hyperlane warp deploy and confirm the warp deploy config is as expected.
  3. Your newly deployed yield route can now accomplish the following:

    1. Transfer USDC: yourchain → ethereum

    2. Transfer USDC: ethereum → yourchain

info

💡 Please note that (at the time of writing) it is only possible for the owner to collect vault generated yield, and pro-rata user claims on yield are coming to yield routes soon.

🎉 Congrats! You have now created a new yield route with your vault. Bridged user assets can now earn passive yield while present in the origin warp route.

warning

Please note that this collateralization strategy takes on certain ISM trust assumptions, and there is inherent risk that the underlying ERC-4626 vault becomes under-collateralized.

Check out some additional information, published by the Hyperlane supporting team, Cheese Chain, and the Ethereum Foundation:

→ Hyperlane: Introducing Yield Routes

→ ERC-4626 Tokenized Vault Standard