A significant shift in the stablecoin landscape is underway as a competitive bidding showdown unfolds on Hyperliquid, a burgeoning trading platform. The target of this contest is the issuance rights for USDH, Hyperliquid’s native dollar-pegged stablecoin. Analysts anticipate that the outcome of this clash could play a pivotal role in shaping the future of the stablecoin sector, which has evolved from grassroots community initiatives to a major battleground for established financial institutions.
The bidding war included heavyweights such as Paxos, Sky, and Ethena, alongside Native Markets, a lesser-known startup backed by Stripe’s stablecoin subsidiary, Bridge. Despite being a relatively new entity, Native Markets secured the USDH contract over its more established competitors, largely due to its affiliation with Stripe and the significant financial backing that came with it.
Stablecoins are integral to the decentralized finance (DeFi) ecosystem, acting as a reliable dollar-backed medium for transactions, collateral, and settlements. The competition for USDH exemplifies the intense rivalry within the market as established companies and institutions vie for a piece of the lucrative stablecoin pie. Notably, Circle and its USDC stablecoin has formed strategic partnerships, sharing revenue with platforms like Coinbase to stabilize earnings during market fluctuations.
The contest saw aggressive offers from various contenders, with Paxos pledging to forego revenue until USDH surpassed $1 billion in circulation, while Agora proposed sharing 100% of net revenue with Hyperliquid. Ethena’s bid also hinted at a 95% revenue-sharing model. Ultimately, Native Markets prevailed, capitalizing on its strategic connections and the emerging relevance of branding and partnerships in a field traditionally dominated by technological advantages.
Zaheer Ebtikar, co-founder of Split Capital, noted that stablecoin issuers are increasingly desperate for liquidity and market share, indicating how highly competitive this sector has become. Despite the established dominance of USDC on Hyperliquid—holding over $5.6 billion in deposits—the introduction of USDH could significantly alter market dynamics and revenue generation strategies.
Concerns about centralization and the implications of a vertically integrated stablecoin issuer were voiced by Agora co-founder Nick van Eck. Conversely, regulatory frameworks played a crucial role in the bidding process. Paxos operates under a New York trust charter and has been pursuing a federal license, while Native Markets cited its regulatory agility as a key advantage in its selection.
Hyperliquid’s validators, responsible for network security and governance, ultimately chose Native Markets to issue USDH after a closely-watched governance vote closed on September 15. The new token is being marketed as a “Hyperliquid-first, compliant, and natively minted” dollar-backed asset, aimed at reducing the platform’s reliance on USDC and enhancing its liquidity provision.
As Hyperliquid actively works towards innovative financial strategies, it reported record revenue in August, amassing $106 million from perpetual futures trading. The platform plans to decrease spot trading fees by 80% to stimulate liquidity further. With these developments, the launch of USDH is set to empower Hyperliquid to better compete in an increasingly crowded decentralized finance landscape.
Native Markets’ reserves for USDH will be managed in cash and treasuries by BlackRock, while on-chain tokenization will be facilitated through Superstate and Bridge. The revenue generated from these reserves will support both Hyperliquid’s Assistance Fund and broader ecosystem development efforts, signaling a multifaceted approach to growth in the competitive world of stablecoins.
