Full Breakdown
Competitive Landscape for Hyperliquid's USDH Stablecoin
9/11/2025, 12:49:00 PM
Overview of the USDH Stablecoin Race
The launch of Hyperliquid's native stablecoin, USDH, has ignited a fierce competition among major players in the decentralized finance (DeFi) space. With the decentralized exchange Hyperliquid seeking to reduce its reliance on external stablecoins like Circle's USDC, at least ten organizations have submitted proposals to secure the rights to issue USDH. Notable contenders include Native Markets, Paxos, Ethena, Sky, and Agora, each vying for a stake in what could become a multi-billion dollar digital currency.
Key Proposals and Contenders
Native Markets, led by Max Fiege, currently holds a commanding lead in the bidding process, with Polymarket bettors assigning it an 84% chance of winning. The proposal includes a hybrid reserve model, where off-chain assets would be managed by BlackRock, while on-chain reserves would be held through Bridge, a Stripe-owned platform. Native Markets also promises to allocate half of the yield from reserve assets for HYPE token buybacks and the other half for USDH expansion.
Paxos, in second place with an 8% chance, has revised its proposal to include a partnership with PayPal, aiming to integrate USDH into PayPal and Venmo products, alongside a $20 million incentive for the Hyperliquid ecosystem. Ethena, another strong contender, proposes a USDtb-backed stablecoin, pledging to return 95% of reserve revenue to the Hyperliquid community and offering $75 million in incentives.
Other participants include Sky, which has a less favorable standing due to its recent S&P Global rating, and Agora, which has also submitted a proposal. The competition is characterized by lavish promises aimed at attracting Hyperliquid's validators, who will ultimately decide the winning bid.
Criticism and Controversy
The competition has not been without controversy. Haseeb Qureshi from Dragonfly Capital has raised concerns about potential favoritism towards Native Markets, suggesting that the proposal may have benefited from prior knowledge of the request-for-proposals process. However, Alex Svanevik, CEO of Nansen, countered these claims, asserting that the bidding process is competitive and that validators are actively engaging with all bidders.
Official Statements and Responses
Paxos emphasized its commitment to regulatory compliance and long-term alignment with the Hyperliquid community, stating, “Paxos takes nothing until we reach $1 billion in TVL.” Ethena highlighted its institutional backing, asserting that its proposal would deliver on-chain liquidity and cash management for Hyperliquid users.
What's Next
The submission window for proposals closed on September 10, 2025, with a decision expected on September 14, 2025. The outcome will not only determine who issues USDH but also shape the future of liquidity and stablecoin governance within the Hyperliquid ecosystem.
Verbatim Quotes
- “Hearing from multiple bidders that none of the validators are interested in considering anyone besides Native Markets.” — Haseeb Qureshi, Managing Partner, Dragonfly Capital
- “PayPal and Venmo have 400M+ users. Paxos is the only neutral, regulated issuer that can unlock an entirely new institutional customer segment for Hyperliquid that no other issuer can reach.” — Max Fantle, Paxos Executive
- “the real work on this whole USDH setup starts when launch happens, as the real question will be about scaling to $5 billion.” — Charlie, Contributor at Felix Protocol
The USDH stablecoin race exemplifies the dynamic and competitive nature of the DeFi landscape, with significant implications for the future of stablecoin infrastructure.
