In a highly contentious governance battle unfolding within the cryptocurrency realm, decentralized exchange and layer-1 chain Hyperliquid is set to make a pivotal decision regarding the launch of its proprietary stablecoin, USDH. This pivotal moment holds significant consequences, particularly as it stands to potentially replace the $5.5 billion worth of USDC, which currently constitutes 95% of the platform’s total stablecoin supply. The proposed stablecoin could also generate substantial revenue from yields on U.S. Treasury securities.
A critical validator vote scheduled for September 14 will determine the entity that will take charge of issuing USDH. The bidding landscape has attracted formidable contenders, including Paxos and Frax, along with a consortium involving Agora and MoonPay. However, the discussion has sharpened around a proposal linked to Stripe’s Bridge platform, igniting fierce debate among community members.
Concerns have been raised that awarding control of the stablecoin to Stripe—a company developing its own blockchain, Tempo, and already possessing wallet infrastructure through its acquisition of Privy—might effectively transfer economic sovereignty away from Hyperliquid and into the hands of a direct competitor. Nick van Eck, CEO and co-founder of Agora, voiced this sentiment emphatically, questioning the wisdom of such a move: “If Hyperliquid relinquishes their canonical stablecoin to Stripe, a vertically integrated issuer with clear conflicts, what are we even doing?”
In this heated context, MoonPay’s President Keith Grossman emphasized the advantages of their participation in the Agora coalition. He pointed out that MoonPay possesses more licenses and verified users than Stripe or Bridge, asserting that USDH “deserves scale, credibility and alignment – not BS capture.”
The competitive field has been made even more complex by proposals from various parties. Paxos has pledged 95% of its reserve earnings towards buybacks of the HYPE token, leaning on its long history as a regulated issuer. On the other hand, Frax has proposed a “community-first” model that promises to pass through 100% of Treasury yields to users, without taking any cut.
Agora’s bid, framed around the principles of neutrality and alignment, commits to allocating 100% of net revenue for HYPE buybacks or for Hyperliquid’s Assistance Fund. As the deadline for proposals looms on September 10, it is anticipated that more bids may emerge in the coming days, further intensifying the competition. Notably, Ethena has hinted at a possible entry into the bidding process.
The multifaceted proposals each offer unique visions for how USDH is expected to operate. Paxos embraces a regulatory-first strategy, while Frax focuses on user yields, and Agora champions a Hyper-native coalition that is supported by institutional custodians and consumer-facing payment channels. As Hyperliquid already boasts nearly an 80% market share in the DeFi derivatives market, the right to issue its native stablecoin will be a lucrative opportunity for the final winner—a decision that holds the potential to reshape the landscape of stablecoins in the crypto ecosystem.
The Hyperliquid Foundation has indicated that it will “effectively abstain” from the decision-making process, thereby placing the outcome solely in the hands of the validators. With substantial stakes on the line and a crowded field of bidders, the upcoming vote is poised to be a defining moment for the future of USDH and the continued evolution of decentralized finance.
