Hyperliquid's USDH Stablecoin Race Intensifies with Strategic Proposals

By: Eva Baxter

The competition to issue Hyperliquid's USDH stablecoin is heating up with major players such as Paxos, Ethena, Agora, and newcomer Native Markets vying for the mandate. Hyperliquid, previously reliant on Circle's USDC for liquidity, ignited significant interest when it announced plans to launch its own stablecoin USDH. The initiative aims to empower the decentralized exchange with its currency, promising substantial value for the successful bidder. Notably, at least eight organizations have entered the fray. The outcome ultimately rests in the hands of the Hyperliquid network validators.

Paxos has recently revised its proposal, positioning itself with strong backing from PayPal and Venmo. This enhanced bid includes the integration of USDH within PayPal's financial ecosystem and $20 million earmarked for incentives within the Hyperliquid ecosystem. The proposal further promises free on-and-off ramping for USDH and Hyperliquid (HYPE) token listings on PayPal and Venmo platforms. Furthermore, PayPal is committed to fostering the Hyperliquid ecosystem through these integrations.

Meanwhile, Native Markets, led by Hyperliquid investor Max Fiege, has emerged as a formidable contender, gaining significant traction among speculators. The platform's proposal features a hybrid reserve model, with off-chain assets managed by BlackRock, and on-chain reserves facilitated through Superstate using Bridge, a Stripe-affiliated entity. Their pitch appeals through pledges to share yields from reserve assets for HYPE token buybacks and USDH expansion, despite some community concerns regarding its reliance on Stripe, which may eventually shift focus to its blockchain project, Tempo.

Validators are intrigued by proposals from longstanding entities like Paxos and Ethena due to their established reputations and experience. As Hyperliquid's custodians evaluate options, the contest underscores the dynamic and competitive nature of the stablecoin issuance landscape, shaping up to be one of the most aggressive governance battles in recent times. This pivotal decision not only shapes Hyperliquid's future but also indicates broader trends in the decentralized finance space as these proposals continue to evolve.