Decentralized finance (DeFi) protocol Hyperliquid has launched native staking on its mainnet, allowing holders to receive rewards for securing the network.
According to a Dec. 30 announcement, users can pick validators to stake tokens based on different metrics, such as uptime, commission, reputation, and community contributions. The featured debuted with 16 validators.
The Hyperliquid protocol offers decentralized trading for crypto assets. According to DefiLlama, it has amassed over $12 billion in trading volume in December, generating more than $8.6 million in cumulative revenue.
When staking, users lock up tokens to support a network’s operations, such as validating transactions and securing the blockchain. In return, participants earn rewards, usually in the form of additional tokens.
According to data compiled by ASXN, $344 million worth of HYPE tokens have been staked.
Hyperliquid’s cumulative fees. Source: DefiLlama
The Hyperliquid native token airdrop went live in late November when its community received 310 million HYPE tokens, or 31% of its supply. Since then, HYPE’s price has skyrocketed from nearly $3,90 on Nov. 29 to trade around $26.80 at the time of writing.
Hyperliquid has allocated 38.8% of the remaining supply for future emissions and community rewards, along with 6% to the Hyper Foundation treasury, 0.3% to grants and 23.8% to core contributors under a a 1-year lock period.
Decentralized exchanges, such as Hyperliquid, reached a record high in December with a monthly trading volume of $462 billion, mostly driven by anticipation of a more favorable regulatory regime in the United States in 2025.
Tax on staking rewards
While the industry is anticipating a more favorable environment for digital assets in the US, there are still many hurdles to overcome.
For instance, the US Internal Revenue Service recently reaffirmed that rewards earned from staking activities do not constitute new property and should be taxed upon receipt.
The agency used its 2023 guidance in response to a lawsuit over tax on staking earnings, claiming that block rewards are classified as “income” from the moment they are created, taxable based on market value.
In another setback, the IRS disclosed on Dec. 27 final regulations covering decentralized protocols. The tax watchdog classified front-end protocols facilitating crypto trading as brokers, demanding the disclosure of gross proceeds from digital asset transactions, along with details about the taxpayers involved.