Organisations are actively competing to build Hyperliquid’s upcoming USDH stablecoin, with six entities having already submitted proposals on the protocol’s Discord server. This initiative comes in response to Hyperliquid’s announcement of the stablecoin launch, aimed at reducing reliance on external issuers. The USDH stablecoin will operate under the ticker USDH and is set to directly compete with other leading stablecoins like USDC and USDT, which Hyperliquid currently uses in its spot markets.
As the largest perpetual futures exchange in decentralized finance (DeFi), Hyperliquid managed an impressive $378 billion in trading volume last month, indicating significant engagement within the ecosystem. The new stablecoin is expected to capture additional revenue for the platform while allowing validators, who run the network, to vote on which entity should be granted the privilege to launch the dollar-pegged currency.
Among the leading proposals gaining traction are the following:
Paxos: Emerging as the most prominent contender, Paxos is known for its established stablecoins such as PayPal USD and Global Dollar. The firm suggests backing USDH with US Treasury Bills and short-dated treasury bonds, proposing to allocate 95% of the interest generated from these reserve assets toward repurchasing the HYPE token. Paxos has previously contributed to other projects within the Hyperliquid ecosystem, such as LHYPE and WHLP. The community has reacted positively to Paxos’ proposal.
Frax: Representing the largest DeFi protocol to submit a bid, Frax Finance seeks to issue USDH in conjunction with its own Frax Dollar stablecoin, enhancing liquidity by allowing the minting and redemption of tokens across frxUSD, USDC, USDT, and USD. While the firm has not definitively outlined plans for the interest on reserve assets, potential uses include increasing staking yields for HYPE, conducting buybacks, or providing rebates to active traders. Despite generally favorable feedback from the community, some participants have raised concerns about whether Frax’s goals are adequately aligned with those of Hyperliquid.
Agora: Positioned as a white-label stablecoin issuer, Agora proposes to direct 100% of net revenue from USDH’s reserves towards HYPE buybacks. Their reserves will be managed by recognized financial institutions such as State Street and VanEck. Agora aims to extend the USDH stablecoin’s reach by partnering with consumer-oriented applications like EtherFi. Although feedback on its proposal has been primarily positive, questions have emerged about Agora’s motivation for issuing and managing USDH if it intends to share most of the revenue with Hyperliquid.
Native Markets: This newly formed organisation, spearheaded by Max Fiege—an investor and advisor within the Hyperliquid ecosystem—aims to support USDH with both on-chain and off-chain reserves. Initial management will be conducted by BlackRock for off-chain reserves and by Superstate through the stablecoin platform Bridge, owned by Stripe, for on-chain reserves. Native Markets proposes to allocate 50% of reserve interest towards HYPE buybacks and the remaining 50% to foster USDH’s growth. However, concerns have been voiced by governance participants regarding the reliance on Bridge for issuance, which could introduce a potential single point of failure.
As the proposals receive community feedback, the decision on which organisation will be selected is expected to be made following Hyperliquid’s forthcoming network upgrade, the date of which remains yet to be announced. The developments surrounding the USDH stablecoin initiative illustrate a vibrant competitive landscape within the DeFi space, as each organisation seeks to establish a foothold in providing a pivotal asset for Hyperliquid and its users.
