tl;dr
Hyperliquid is seeking a new issuer for its stablecoin USDH, with Ethena Labs emerging as a leading candidate. Ethena proposes to back USDH with USDtb, a stablecoin collateralized by BlackRock and secured by Anchorage Digital, and plans to return 95% of USDH's net revenue to the Hyperliquid commun...
**Hyperliquid’s Stablecoin Showdown: Ethena’s Bold Play to Take the Reins of USDH**
Hyperliquid’s quest to redefine its native stablecoin, USDH, has kicked off a high-stakes race, with Ethena Labs emerging as a formidable contender. On September 9, the DeFi innovator submitted a proposal to become USDH’s issuer, leveraging its institutional-grade infrastructure and a unique blend of partnerships to outmaneuver rivals in a crowded field.
At the heart of Ethena’s bid is a pledge to back USDH entirely with **USDtb**, a stablecoin collateralized by BlackRock’s BUIDL fund and secured by Anchorage Digital. This approach not only signals confidence in institutional-grade reserves but also positions Ethena as a bridge between traditional finance and DeFi’s evolving ecosystem. Yet, the proposal’s real punch lies in its commitment to **returning 95% of net revenue** generated from USDH reserves directly to the Hyperliquid community. That means HYPE token holders could see a windfall through ecosystem development and token purchases—a move that could galvanize the community ahead of the protocol’s next network upgrade.
Hyperliquid’s decision to open USDH’s issuer selection process follows a September 5 announcement that the platform would introduce its own stablecoin in the upcoming upgrade. The timing is strategic: the exchange currently relies on **$5.5 billion in USDC deposits** as its primary settlement currency, but transitioning to a self-sovereign stablecoin could reduce dependency on third-party issuers like Circle. With Hyperliquid’s estimated annualized revenue hitting **$1.3 billion** and its August perpetual contract trading volume peaking at **$405.8 billion**, the stakes are sky-high.
### A Differentiator: Institutional Guardrails and Validator Oversight
Ethena’s proposal stands out by reimagining stablecoin governance. Instead of a single issuer holding the reins, the company plans to create an **elected guardian network of Hyperliquid validators** to oversee USDH operations. This decentralized approach aims to eliminate single points of failure, a critical concern in DeFi’s history of hacks and mismanagement.
Beyond governance, Ethena also promises to launch **hUSDe**, a synthetic dollar product tailored for Hyperliquid’s ecosystem, and has pledged **$75 million in incentives** to fuel the development of HIP-3 markets—key infrastructure for equity perpetual swaps. The firm’s partnerships with **Securitize** to tokenize real-world assets on HyperEVM and integrate USDtb further underscore its ambition to build a robust, institutional-grade settlement layer.
### A Field of Rivals: Who’s in the Running?
Ethena isn’t the only player in the game. Competing proposals include:
- **Paxos**, which plans to back USDH using New York DFS-protected accounts with monthly KPMG attestations.
- **Frax Finance**, aiming to leverage treasury partnerships with BlackRock and Superstate to back frUSD.
- **Agora**, proposing short-dated U.S. Treasuries with proof-of-reserves from Chaos Labs.
- **Sky**, offering flexible collateral via its risk management framework and LayerZero interoperability.
Each contender brings distinct advantages, but Ethena’s institutional pedigree and revenue-sharing model may tip the scales. Omar Kanji of Dragonfly Capital estimates that a successful transition could generate an additional **$220 million in annualized revenue** for HYPE holders while shrinking Circle’s USDC supply by **7%**—a move that could ripple through the broader stablecoin market.
### The Road Ahead: A Test of Trust and Scalability
Ethena’s track record—managing over **$23 billion in tokenized dollar assets**—positions it as a rare counterparty capable of supporting Hyperliquid’s ambitious expansion into equity perpetual swaps via HIP-3 markets. Yet, the path to USDH’s new issuer isn’t a sprint; it requires **community governance approval** and a **gas auction** to secure final deployment rights.
As the race heats up, one thing is clear: Hyperliquid’s choice of USDH issuer will shape its future as a DeFi titan. Whether Ethena’s vision of institutional oversight, synthetic assets, and revenue-sharing wins the day remains to be seen. But for now, the battle for USDH is on—and the crypto world is watching.