Decentralized finance (DeFi) protocol Ethena, currently valued at $0.8093, submitted a proposal on Tuesday to issue Hyperliquid’s upcoming stablecoin. This move places Ethena in a competitive bidding race that has already garnered interest from other prominent firms, including Paxos, Sky, Frax, and Agora.
In Ethena’s proposal, the stablecoin would be fully backed by its own USDtb, which is issued in partnership with Anchorage Digital, a federally chartered bank. Importantly, the USDtb is backed by BUIDL, a tokenized money market fund managed by asset management giant BlackRock, along with Securitize. Robert Mitchnick, BlackRock’s head of digital assets, expressed enthusiasm for Ethena’s USDtb, highlighting its robust backing and its potential to provide institutional-grade cash management and on-chain liquidity to Hyperliquid users.
The proposal outlines a significant benefit to the Hyperliquid ecosystem: Ethena commits to allocating 95% of net revenue from its USDH reserves back to Hyperliquid if its proposal is accepted. Moreover, to facilitate a smoother transition for users, Ethena has promised to cover the costs associated with migrating existing USDC trading pairs on Hyperliquid to USDH, incentivizing adoption of the new stablecoin.
As the competition for the issuance of Hyperliquid’s USDH stablecoin heats up, the decentralized exchange has reported an impressive trading volume of nearly $400 billion in perpetuals last month. This positions Hyperliquid as an attractive hub for stablecoin providers eager to penetrate a lucrative market. Other participants in this bidding frenzy include Sky (formerly MakerDAO), Paxos, Frax, Agora, and Native Markets. Validators are scheduled to cast their votes on these proposals on September 14, indicating that a decision is imminent in the fast-evolving landscape of decentralized finance.
