Hyperliquid: The Biggest Crypto Projects Battling for the USDH Stablecoin

Hyperliquid suddenly has a swarm of suitors making passionate pleas for its hand in marriage to create the USDH stablecoin.

It’s a drama that kicked off last week and has now reached a fevered pitch as some of the biggest crypto companies around compete for the highly sought-after USDH ticker—culminating in an on-chain vote by Hyperliquid stakeholders on Sunday.

Major companies like Paxos, Sky, and Frax Finance have thrown their hats in the ring alongside Ethena, with backing from a BlackRock executive. And yet, it appears a new and relatively unknown team in Native Markets is the current frontrunner.

Hyperliquid is a decentralized exchange, specializing in perpetual futures trading, that lives on its own dedicated layer-1 network by the same. At the time of writing, there’s roughly $5.84 billion in stablecoins on the network—the fifth largest total of all blockchains, per DefiLlama—with USDC accounting for 94.9% of the network’s stablecoins. Over the past 24 hours, it has been responsible for a whopping $1.076 billion in trading volume and has cemented itself as a crucial component in the on-chain economy.

With its own stablecoin, Hyperliquid intends to circumvent the biggest players in the space, such as Circle’s USDC and Tether’s USDT, and secure for itself the lucrative yields these stablecoins generate.

While no “special privileges” will be granted to the token, per the Hyperliquid Foundation, crypto heavyweights are now vying for the chance to control the USDH ticker. The Foundation has said the eventual stablecoin must be “Hyperliquid-first” and “Hyperliquid-aligned,” with many proposals creating frameworks that feed revenue back into the ecosystem in some way.

Whoever eventually launches the USDH stablecoin would likely benefit immensely from the growing Hyperliquid community embracing the token as the stablecoin of the network.

Hyperliquid validators, those responsible for securing the network, should state their voting intention by early Sunday, giving time for users to stake to a validator that matches their vote, before the winner of the USDH competition is formally decided that same day.

Here are the issuers in contention to launch Hyperliquid’s USDH stablecoin:

Native Markets

Founded specifically to “build the best stablecoin” for Hyperliquid, according to its Substack, Native Markets started work “months ago” and informed Hyperliquid Labs of its plans, inquiring about the USDH ticker. 

It proposes to create a stablecoin that will be GENIUS Act-compliant, referring to the landmark stablecoin legislation in the U.S. that President Donald Trump recently signed into law. It plans for Bridge—a platform acquired by payments giant Stripe in 2024—to manage its reserves.

Native Markets says it will contribute half of the yield generated from those reserves towards USDH growth partnerships and the other half to the Assistance Fund, a protocol-driven buy back fund.

“We are prepared to launch a community-aligned stablecoin within days,” Native Markets wrote on Substack on Monday. Already, a top Hyperliquid validator called CMI has stepped forward and shown support for the proposal. 

At the moment, market sentiment is placing Native Markets as the overwhelming favorite to win the bidding for the USDH ticker, though several leading figures in the crypto industry have come forward to suggest the organization has received an unfair advantage.

Ethena x BlackRock

Ethena notably entered the race on Tuesday, with backing from the biggest asset manager in the world, BlackRock. Ethena is the issuer of the third-largest stablecoin by market cap, USDE, per CoinGecko, behind only industry giants Tether and Circle.

The proposal suggests that Ethena’s USDtb, which is the seventh-largest stablecoin, would back USDH, giving it indirect collateralization from BlackRock’s BUIDL fund—a tokenized money market fund. BlackRock’s head of digital assets, Robert Mitchnick, also provided a statement claiming the token would be “uniquely positioned to offer institutional-grade cash management.” 

On top of this, Ethena says 95% of revenue generated by its USDH reserves will be given to the Assistance Fund or used to purchase HYPE, the native token of the Hyperliquid network.

It also suggests that Ethena would cover all transaction costs associated with making USDH the premier stablecoin for Hyperliquid—for example, the costs involved in denominating trading pairs on Hyperliquid in USDH instead of USDC.

Paxos

Established stablecoin company Paxos—issuer of PAX Gold, Global Dollar, and more—is also very much in the mix.

Paxos’ proposal not only claims its token would be GENIUS-compliant but also adhere to global regulations, including Europe’s MiCA. It also proposes fiat onramps via SWIFT, ACH, and wire transfers, as well as plans to enable real-world payments for USDH. Plus, it would look to support Hyperliquid’s token on Paxos’ brokerage platform, which is used by PayPal, Venmo, and more.

Finally, 95% of interest, not revenue, from the reserves backing USDH will be used to purchase HYPE and redistribute it to applications and validators.

Sky (aka MakerDAO)

Ethereum DeFi giant Sky, formerly known as MakerDAO, entered the USDH race on Monday.

Sky is the issuer of the fourth-largest stablecoin by market cap, USDS, formerly known as DAI—which remains the largest decentralized stablecoin on the market.

Sky’s proposal differs from the pack, suggesting USDH be natively multichain (that is, available on various blockchain networks simultaneously), powered by LayerZero, and flexes its security track record and risk management.

Sky also says it will deploy part of its balance sheet into Hyperliquid, start buying HYPE with its profits, and grant a 4.85% return on USDH to the Hyperliquid community.

Agora

Agora, issuers of AUSD, the 29th largest stablecoin by market cap, have directly called out Native Market’s reliance on Stripe, pointing to “clear conflicts” as Stripe builds out its own Tempo layer-1 network—suggesting that Stripe would rather push users onto Tempo than Hyperliquid.

Agora proposes to take full control of the stablecoin issuance itself, boasting VanEck as its asset manager. It says it will share 100% of net revenue with the Assistance Fund or buy back HYPE, and like the rest, promises to be GENIUS-compliant.

“We strongly urge caution against the utilization of Stripe (Bridge) as an issuer,” Nick van Eck, co-founder of Agora, wrote. “Running an institutional-grade, liquid stablecoin, at global scale is hard. We strongly urge the community to choose experienced partners that are set up for the long-term success of this initiative.”

Frax Finance

A mysterious proposal by Frax Finance suggests a “Frax-led alliance with a federally regulated U.S. bank issuer” to issue USDH. However, due to the short window and the legal implications, the proposal is unable to disclose the issuer’s name.

That said, the proposal says that USDH will be backed one-for-one with U.S. treasuries via tokenized funds, will be GENIUS-compliant, and with the entire treasury yield returned to Hyperliquid in some way.

Others

There are many more proposals in the USDH hunt from lesser-known entities.

One, for example, suggests that the USDH ticker should be burned to foster a true free-market environment. Another, very obviously a joke, is written by someone pretending to be the Hyperliquid co-founder and CEO, Jeff Yan, intentionally misspelling words in the Boden meme style and stating that “chart make zig-zag.”

The other, more serious proposals include one from OpenEden, which will cycle 100% of its fees into buying HYPE and distributing it to network validators. 

To many, USDH mania has been the most exciting that on-chain governance has been in a long time. It all builds up to Sunday’s main event when Hyperliquid validators make their final votes.