Abstract
Hedgehog family morphogens present an interesting paradox: despite being hydrophobic due to dual-lipid modifications, they form spatial concentration gradients that are highly conserved and essential for many aspects of metazoan development. Using live-cell single-molecule tracking and engineered synthetic signaling ligands, we isolated the distinct contribution of each lipid modification to Hedgehog diffusion and signaling potency. We found that although both lipid modifications enhance signaling potency, they do so through different mechanisms. Palmitate directly promotes receptor engagement, whereas cholesterol topologically confines secreted morphogens on the cell surface, effectively using the lipid membrane as a non-signaling co-receptor that enriches ligands locally at the cost of restricting long-range diffusion. Our results on the function of cholesterol point to an intrinsic tradeoff between signaling potency and gradient formation, with implications for the evolution and mechanism of non-signaling co-receptors.