> For the complete documentation index, see [llms.txt](https://docs.bounce.tech/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.bounce.tech/technical/custody.md). # Custody Throughout the whole flow of the leveraged tokens, the custody of funds always remains with the minting and redeeming user. When a user mints, they receive an ERC20 which represents fractional ownership of the USDC held within the leveraged token, and associated positions on Hyperliquid. The funds held within the leveraged token are fully owned by the leveraged token, and at no point does custody of the funds leave the smart contract. When funds are bridged to HyperCore, they are still owned and custodied by the Leveraged Token Smart Contract, and are held in the HyperCore balance of the smart contract. Orchestration of rebalances and bridging are done using [API Wallets](https://hyperliquid.gitbook.io/hyperliquid-docs/for-developers/api/nonces-and-api-wallets) which allow the automation layer to bridge, open positions, modify positions, and close positions on behalf of the leveraged tokens. However, API wallets do not allow for the withdrawal or transfer of funds outside of the leveraged token. This architecture enables a trustless environment where permissions are enforced to be limited in scope to only what is needed to enable leveraged token functionality. --- # 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.bounce.tech/technical/custody.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.