Hyperliquid Prepares Governance-Based USDH Stablecoin Launch
By: Eva Baxter
Hyperliquid is set to introduce a novel governance-driven approach to launch its native stablecoin, USDH, as part of its next network upgrade. This announcement, communicated on their Discord channel, marks a shift in stablecoin launches, allowing competition among development teams to deploy the stablecoin rather than a traditional rollout. USDH is designed as a 'Hyperliquid-first and compliant' dollar-pegged asset, creating significant buzz within the community.
Teams interested in deploying the stablecoin must submit proposals, and successful candidates will face a gas auction to enable their deployment. The implications of this launch could profoundly affect stablecoin dynamics on the Hyperliquid platform. Omar Kanji, a partner at Dragonfly, noted the potential impact on Circle's USDC, currently the main settlement currency for derivatives trading on the platform. With approximately $5.5 billion in USDC deposits on Hyperliquid, a migration to USDH might generate an additional $220 million annually for HYPE token holders, assuming a 4% yield. However, this shift would also reduce Circle's revenues by a similar margin and decrease USDC's outstanding supply by 7%.
Beyond the stablecoin launch, Hyperliquid is undertaking significant upgrades to enhance trading efficiency on their platform. Planned changes include reducing taker fees, maker rebates, and user volume contributions by 80% for spot pairs involving two quote assets, aiming to deepen liquidity and reduce trading costs for users. Additionally, the expansion of access to spot quote assets will commence on the testnet with a transition to a permissionless model, incorporating staking requirements and slashing penalties for security.
These developments coincide with an impressive growth phase for Hyperliquid, which has been recording unprecedented trading volumes. As per data from DeFiLlama, Hyperliquid's monthly trading volume hit a record high of about $400 billion in August, boosting its market share beyond 60%. The governance token, HYPE, has mirrored this growth, experiencing a gain of over 22% in the past month, reaching a peak before stabilizing. This trajectory suggests that Hyperliquid's innovations and strategic shifts may significantly recalibrate the decentralized finance landscape.
