Generating Passive Income with Hyperliquid

A Beginner's Guide

What if Your Money Could Make Money While You Sleep?

Imagine you have a special piggy bank. Instead of just sitting there, the money inside your piggy bank works for you, earning you a little extra every day, even while you're at school or sleeping. That's the basic idea behind passive income – making money without having to actively work for it all the time.

Now, imagine a new kind of internet where you are in control of your own money, without needing a bank or any other middleman. This is the world of Decentralized Finance (DeFi), and it's like a giant, global financial playground built on the internet. In this playground, you can do many of the things you would do with a regular bank – like lending, borrowing, and trading – but in a more open and transparent way.

One of the most exciting parts of this DeFi world is a platform called Hyperliquid. Think of Hyperliquid as a super-fast, super-efficient part of this playground, specially designed for trading and earning. It's like the newest, coolest video game arcade, but instead of winning tickets, you can earn real money.

This article will be your guide to understanding Hyperliquid and how you can use it to generate passive income. We'll explain everything in simple terms, so even if you've never heard of DeFi or cryptocurrency before, you'll be able to follow along. We'll also look at the potential rewards, the risks involved, and how Hyperliquid compares to other places in the DeFi playground.

Ready to learn how to make your money work for you? Let's dive in!

What is Decentralized Finance (DeFi)?

Imagine you and your friends have a lemonade stand. Usually, one person (let's call her the "banker") is in charge of all the money. She keeps it in a cash box, and if you want to borrow some money to buy more lemons, you have to ask her. She also keeps a record of who has how much money. This is like the traditional financial system, where banks and other companies are in the middle of everything.

Now, what if you and your friends decided to do things differently? Instead of having one person in charge, you create a magic, transparent cash box that everyone can see into. This cash box has a set of rules that everyone agrees on beforehand. For example, a rule might be: "If someone puts in a dollar, they get a special token that shows they own that dollar." Another rule could be: "If someone wants to borrow a dollar, they have to put up something valuable as a guarantee, like a cool toy."

This magic cash box is what we call a smart contract in the world of DeFi.

It's a computer program that runs on a special, shared computer network called a blockchain. The blockchain is like a public notebook that everyone can see, so it's very hard to cheat or change the rules without everyone knowing.

DeFi is like a whole system of these magic cash boxes, all connected to each other. You can use them to:

• Lend and borrow money: Just like with the lemonade stand, you can put your money into a magic cash box for others to borrow, and you'll earn a little extra for doing so. This is a form of passive income!

• Trade different kinds of digital money (cryptocurrencies): You can swap your special tokens for other kinds of tokens, just like trading different flavors of candy with your friends.

• Earn rewards: By helping the system work, for example, by putting your money into the magic cash boxes, you can earn rewards in the form of more tokens.

The most important thing about DeFi is that you are in control of your own money. There's no banker or company in the middle telling you what you can and can't do. It's like being your own bank! This is why it's called "decentralized" – the power is spread out among everyone who uses it, not concentrated in one place.

So, in a nutshell, DeFi is like a new, open, and fair financial system built on the internet, where you can make your money work for you in exciting new ways.

What is Hyperliquid?

The Super-Fast Arcade of the DeFi World

Now that you understand the basics of DeFi, let's talk about Hyperliquid.

If DeFi is a giant financial playground, Hyperliquid is the brand-new, super-advanced arcade that just opened up. It's designed to be incredibly fast, efficient, and exciting for users who want to trade and earn.

Imagine you're playing a video game. You want it to be fast and responsive, right? You don't want to press a button and wait five seconds for your character to jump. That's what trading on some older DeFi platforms can feel like – slow and clunky.

Hyperliquid, on the other hand, is built for speed. It has its own special blockchain (remember the shared computer network we talked about?) that's designed to handle a huge number of transactions very, very quickly. In fact, it can handle over 200,000 orders per second! [1] That's like having a video game that never, ever lags.

Here's what makes Hyperliquid special, explained in simple terms:

• It has its own private racetrack: Instead of building its arcade on a crowded public road (like the main Ethereum blockchain, where many other DeFi projects live), Hyperliquid built its own private racetrack. This is why it's so fast. It doesn't have to share the road with anyone else, so there are no traffic jams.

• It has a special rulebook: Hyperliquid uses its own unique set of rules (a consensus mechanism called HyperBFT) to make sure everything runs smoothly and securely. These rules are designed for high-speed trading, so everything happens almost instantly.

• It has a transparent order book: When you want to trade on Hyperliquid, you can see all the buy and sell orders from other users in real-time. This is like being able to see everyone's cards in a trading card game – it's completely transparent. This is called an on-chain order book, and it's something that many other decentralized exchanges don't have.

• There are no gas fees: On many other DeFi platforms, you have to pay a small fee (called a "gas fee") every time you make a transaction. It's like paying a toll every time you drive on a road. On Hyperliquid, there are no gas fees for trading, which makes it much cheaper to use. [2]

  
  

What can you do on Hyperliquid?

Hyperliquid is a perpetual exchange, which is a fancy way of saying you can trade on the future price of cryptocurrencies without having to actually own them. It's a bit like betting on whether the price of a video game will go up or down, and you can use leverage to make your bets bigger. Leverage is like using a magnifying glass to make your money seem bigger, but it also makes the risks bigger, so it's important to be careful.

But you don't have to be a trader to use Hyperliquid. You can also earn passive income by helping the platform run smoothly. Let's explore how you can do that in the next section.

How to Generate Passive Income on Hyperliquid

Now for the exciting part: how you can make your money work for you on Hyperliquid. There are two main ways to generate passive income on the platform:

1. HYPE Staking (Delegation Program): This is like lending your money to the arcade to help it run, and in return, you get a share of the profits.

2. Market Making: This is like being a shopkeeper in the arcade, providing the items that other people want to buy and sell, and earning a small fee for your service.

Let's break down each of these options:

1. HYPE Staking: The Easiest Way to Earn

What is HYPE?

HYPE is the special token of the Hyperliquid platform. It's like the arcade's own currency. You can use it to pay for things on the platform, and if you own HYPE, you also get to vote on important decisions about how the arcade is run. This is called governance.

What is staking?

Staking is the process of locking up your HYPE tokens to help secure the Hyperliquid network. In return for helping out, you earn rewards in the form of more HYPE tokens. It's like putting your money in a special savings account that pays you interest.

On Hyperliquid, this is done through the Delegation Program. You "delegate" your HYPE tokens to a validator, who is a trusted person or group that helps to run the network. The validator does the technical work, and you get to share in the rewards.

How to get started with HYPE staking?

1. Get some HYPE tokens: You can buy HYPE tokens on a cryptocurrency exchange. You'll need at least 10,000 HYPE to participate in the delegation program. [3]

2. Choose a validator: You'll need to choose a validator to delegate your tokens to. You can find a list of validators on the Hyperliquid website.

3. Delegate your tokens: Once you've chosen a validator, you can delegate your HYPE tokens to them through the Hyperliquid platform.

   
   

What are the rewards?

The rewards for staking HYPE are currently around 2% per year. [4]

This means that if you stake 10,000 HYPE, you'll earn about 200 extra HYPE tokens over the course of a year. While this might not seem like a huge amount, it's a very low-risk way to earn passive income, as you're simply holding onto your tokens and helping to secure the network.

What are the risks?

The main risk with staking is that the price of the HYPE token could go down. Also, your tokens will be locked up for a year, so you won't be able to sell them during that time. [3]

2. Market Making: For the More Adventurous

What is market making?

Market making is the process of providing liquidity to the market. In simple terms, it means you're always willing to both buy and sell a particular cryptocurrency. By doing this, you make it easier for other people to trade, and you earn a small profit from the difference between the buying and selling price (this is called the spread).

Imagine you have a shop that sells two kinds of candy: chocolate and gummy bears. You always have both in stock, so if someone wants to trade their chocolate for gummy bears, you can help them out. You might charge a tiny fee for this service, and that's how you make a profit.

On Hyperliquid, you can do the same thing with cryptocurrencies. You can provide liquidity to a trading pair (for example ETH/USDC) and earn fees from the trades that happen in that pair.

How to get started with market making?

Market making on Hyperliquid is more advanced than staking and requires some technical knowledge. You'll need to use the Hyperliquid API (a way for computer programs to talk to each other) to create your own trading bot. Hyperliquid provides a Python SDK (a set of tools for the Python programming language) to help you get started. [5]

What are the rewards?

The rewards for market making can be much higher than for staking, but they also come with higher risks. Your potential profit depends on the trading volume in the pair you're providing liquidity to, as well as your trading strategy.

What are the risks?

The main risk with market making is impermanent loss. This is a fancy term for when the price of the cryptocurrencies you're holding goes up or down, and you end up with less money than if you had just held onto them. It's a complex topic, but it's important to understand the risks before you start market making.

Hyperliquid by the Numbers: A Look at the Stats

To give you a better idea of how big and active the Hyperliquid platform is, let's take a look at some key statistics as of August 30, 2025.

Metric	Value	What it means
Total Users	651,222+	Over half a million people are using Hyperliquid! [6]
Total Trading Volume	$2.5+ trillion	That's the amount of money being traded on the platform. [6]
Total Value Locked (TVL)	$761+ million	This is the total amount of money that users have deposited into the platform. [7]
HYPE Market Cap	$14.6+ billion	This is the total value of all the HYPE tokens in circulation. [8]
HYPE Token Price	~$43.92	This is the price of a single HYPE token. [8]
24-Hour Trading Volume	$157+ million	This shows how much trading activity is happening on the platform on a daily basis. [8]

These numbers show that Hyperliquid is a major player in the DeFi space, with a large and active user base and a significant amount of money flowing through the platform. This is a good sign for the long-term health and stability of the platform.

Risks and Benefits of Using Hyperliquid

Like any investment, using Hyperliquid to generate passive income comes with both risks and benefits. It's important to understand both sides before you get started.

Benefits

• High potential returns: The potential returns from market making on Hyperliquid can be much higher than with traditional investments.

• Passive income: Once you've set up your staking or market making strategy, you can earn money without having to actively manage it every day.

• Be your own bank: With DeFi, you're in control of your own money. You don't have to rely on a bank or other financial institution.

• Transparency: All transactions on the Hyperliquid blockchain are public, so you can see exactly what's happening with your money.

• Low fees: Hyperliquid's zero gas fees for trading make it much cheaper to use than many other DeFi platforms.

  
  

Risks

• Impermanent loss: This is the biggest risk for market makers. If the price of the cryptocurrencies you're holding changes significantly, you could lose money.

• Smart contract risk: There's always a small risk that there could be a bug in the smart contracts that run the Hyperliquid platform. This could lead to a loss of funds.

• Volatility: The price of cryptocurrencies can be very volatile, which means they can go up or down in value very quickly. This can be both a risk and an opportunity.

• Regulatory risk: The rules and regulations around DeFi are still evolving. It's possible that new regulations could be introduced that could affect the Hyperliquid platform.

• Centralization risk: While Hyperliquid is a decentralized platform, it is still more centralized than some other DeFi platforms. This means that there is a small risk that the team behind Hyperliquid could make decisions that are not in the best interests of the users.

  
  

Hyperliquid vs. Other Liquidity Pools: A Comparison

Hyperliquid is not the only place in the DeFi playground where you can earn passive income. There are many other platforms, each with its own strengths and weaknesses. Let's take a look at how Hyperliquid compares to some of the most popular ones.

Feature	Hyperliquid	Uniswap	SushiSwap	Curve Finance	dYdX
Platform Type	Perpetual Exchange	AMM	AMM	Stablecoin AMM (*)	Perpetual Exchange
Speed	Very Fast (sub-second)	Slow (Ethereum-based)	Slow (multi-chain)	Slow (Ethereum-based)	Fast (Cosmos-based)
Fees	Zero gas fees	High gas fees	High gas fees	Low slippage	Low fees
Passive Income	Staking, Market Making	Liquidity Pools	Yield Farming	Stablecoin Pools	Staking
Impermanent Loss	Yes (for market makers)	Yes	Yes	Low (for stablecoins)	No (for staking)
Best for	Active traders, advanced users	Beginners, simple swaps	Yield farmers	Stablecoin users	Professional traders

*AMM - Automated Market Makers

Hyperliquid vs. Traditional AMMs (Uniswap, SushiSwap)

The biggest difference between Hyperliquid and traditional Automated Market Makers (AMMs) like Uniswap and SushiSwap is the way they handle trading. AMMs use a mathematical formula to determine the price of an asset, while Hyperliquid uses a traditional order book, just like a stock exchange. This makes Hyperliquid much more efficient for active traders.

For passive income earners, the main difference is the type of risk you're taking on. With AMMs, the biggest risk is impermanent loss. With Hyperliquid, the biggest risk for market makers is also impermanent loss, but for stakers, the main risk is the price of the HYPE token.

Hyperliquid vs. Curve Finance

Curve Finance is a specialized AMM that is designed for trading stablecoins (cryptocurrencies that are pegged to the value of a real-world asset, like the US dollar). This makes it a very low-risk platform for passive income earners, as the risk of impermanent loss is much lower.

However, the potential returns on Curve are also much lower than on Hyperliquid. Curve is a good option for conservative investors who are looking for a safe and steady way to earn a small return on their stablecoins.

Hyperliquid vs. dYdX

dYdX is another perpetual exchange that is very similar to Hyperliquid. Both platforms are designed for high-speed trading and offer similar features. The main difference between the two is their underlying technology. dYdX is built on the Cosmos blockchain, while Hyperliquid has its own custom blockchain.

This gives Hyperliquid a slight edge in terms of speed and performance, but dYdX is a more established platform with a larger user base. Both platforms are good options for experienced traders who are looking for a high-performance trading experience.

Conclusion: Is Hyperliquid Right for You?

Hyperliquid is a powerful and innovative platform that offers a unique combination of speed, performance, and low fees. It's a great option for experienced traders who are looking for a professional-grade trading experience, as well as for users who are looking for a way to earn passive income through staking or market making.

However, it's important to remember that Hyperliquid is still a new platform, and it comes with its own set of risks. Before you get started, make sure you do your own research and understand the risks involved. If you're new to DeFi, it might be a good idea to start with a more established platform like Uniswap or Curve Finance before you dive into the world of perpetual exchanges.

But if you're feeling adventurous and you're willing to take on a bit of risk, Hyperliquid could be a great way to make your money work for you and earn a passive income in the exciting new world of Decentralized Finance.

References

[1] Hyperliquid Docs: About Hyperliquid. (2025). Retrieved from https://hyperliquid.gitbook.io/hyperliquid-docs

[2] CoinMarketCap: Hyperliquid. (2025). Retrieved from https://coinmarketcap.com/currencies/hyperliquid/

[3] Hyperliquid Docs: Delegation program. (2025). Retrieved from https://hyperliquid.gitbook.io/hyperliquid-docs/validators/delegation-program

[4] CoinLedger: What Is Hyperliquid?. (2025). Retrieved from https://coinledger.io/learn/what-is-hyperliquid

[5] Hyperliquid Docs: Market making. (2025). Retrieved from https://hyperliquid.gitbook.io/hyperliquid-docs/trading/market-making

[6] Hyperliquid Stats. (2025). Retrieved from https://stats.hyperliquid.xyz/

[7] DefiLlama: Hyperliquid. (2025). Retrieved from https://defillama.com/protocol/hyperliquid

[8] CoinMarketCap: Hyperliquid. (2025). Retrieved from https://coinmarketcap.com/currencies/hyperliquid/