The Hyperliquid platform incorporates a perps DEX, and staking of the HYPE token, on a new Layer-1 chain. It also has the option to deposit USDC that is bridged to Arbitrum, in order to provide liquidity and earn passive income generated from platform fees. The entire Hyperliquid platform is growing in terms of trading volume and attention, and as such, it represents a solid option if looking for a place to earn from stablecoin deposits.
Of the many tokens launched in 2024, one of the few that has shown sustained strength is HYPE from Hyperliquid, and one of the biggest reasons for the token’s performance is that it’s attached to a well-executed platform that has strong utility, community, and continues to attract new users.
In this guide then, we’ll take a look at what Hyperliquid is, how it works, and pick up on a simple strategy to earn solid returns simply by depositing stablecoins.
Before we dive in though, a reminder that DeFi always comes with risks, and you need to be aware of hazards including smart contract vulnerabilities, loss of market liquidity, and in this case, new Layer-1 reliability issues and the possibility of oracle manipulation. Please refer to the Hyperliquid documents for more detail on these potential risks.
What Is Hyperliquid?
Gaining attention after launching its HYPE token last November, Hyperliquid is a DeFi ecosystem operating on its own Layer-1, EVM-compatible blockchain, which links up with Arbitrum for when you’re moving assets on and off chain. At its heart is a decentralized perps trading exchange that is designed to compete with centralized alternatives, meaning it offers over a wide range of tokens, you can margin trade with leverage up to 50x and also take short positions, and when trading, there are no gas fees and no requirement to sign off transactions in your wallet.
Hyperliquid is gaining a lot of traction right now, with the perps exchange processing almost $200 billion of trading volume last month in its strongest performance to date.
In addition, Hyperliquid offers a way to earn passive income through depositing to a vault called the Hyperliquidity Provider (HLP). This vault currently has a TVL of over $417 million, and its purpose is to provide liquidity to the Hyperliquid platform.
HLP is fully community-owned and generates revenue from the exchange’s trading fees, which are then fully distributed among depositors. While Hyperliquid is a valuable option if you’re looking for decentralized perps trading, in this guide we’ll focus on how to use the HLP vault in order to earn rewards on stablecoins.
How to Deposit to the HLP Vault
First of all, you’re going to need USDC on Arbitrum, which is to be transferred across to Hyperliquid. If you don’t already have that set up, you can bridge across from Ethereum to Arbitrum using the official Arbitrum bridge, or Rango is another option, allowing you to bridge tokens across many chains. You will also need a small amount of ETH in your Arbitrum wallet in order to cover gas for the initial deposit to Hyperliquid.
With USDC on Arbitrum in your wallet, you can then visit the Hyperliquid app and click on the Vaults tab. As you’ll see, there are then multiple options, but in this case you need to click on the top choice: Hyperliquidity Provider.
That will take you to the HLP vault,…
