Battle for Dominance Among Stablecoin Giants: Hyperliquid USDH Code Control Vote Enters Heated Stage

The decentralized exchange (DEX) Hyperliquid platform announced the launch of its native stablecoin USDH, with the issuance party determined through a validator voting mechanism. This initiative has attracted industry giants such as Ethena Labs, Paxos, Frax Finance, and Sky Ecosystem, with the winner expected to control the issuance rights of digital money worth billions of dollars, generating approximately 220 million USD in reserve income annually. The proposal submission window will close today (September 10, 2025, UTC 10:00), with voting officially starting on September 14. The decision of the Hyperliquid community will reshape the stablecoin ecosystem of the platform.

Hyperliquid's strategic motivation: to break free from external dependencies and achieve ecological independence.

Hyperliquid, as the leading platform in the DeFi space for 2025, saw a perpetual contract trading volume of up to 400 billion USD last month. Currently, the total supply of stablecoins on the platform reaches 5.6 billion USD, with 95% relying on the issuance of USDC by Coinbase. The leadership believes that this excessive reliance on external stablecoins not only increases risk but also causes the platform to miss out on potential gains from treasury yields and liquidity incentives. Therefore, Hyperliquid has chosen to launch USDH as “Hyperliquid's first, consistent, and compliant USD stablecoin,” aiming to reduce dependence on USDC and USDT and promote ecological self-sufficiency.

This decision is not isolated, but is synchronized with the upcoming network upgrade of the platform, which includes reducing spot trading fees by 80%, introducing a permissionless spot quoting asset mechanism, and enhancing liquidity through on-chain governance. The launch of USDH will test the governance model of Hyperliquid, allowing validators to directly participate in critical infrastructure decisions, which is seen as a milestone in the democratization of DeFi. The platform emphasizes that USDH is not an exclusive stablecoin, but one of many dollar-pegged assets in the ecosystem; however, its ticker code will bring significant liquidity advantages.

Intense Competition: Ten Giants Submit Proposals, Revenue Sharing Becomes the Focus

As of now, ten major participants have submitted proposals for the USDH contract, including Ethena Labs, Paxos, Frax Finance, Sky Ecosystem, Curve Finance, Native Markets, Bastion Platform, and Agora. Each proposal varies structurally, ranging from fiat-backed centralized solutions to decentralized collateralized debt position (CDP) models, but all emphasize compliance, first-day liquidity commitments, and revenue-sharing with the Hyperliquid ecosystem.

Ethena Labs: The latest competitor to join, whose proposal uses BlackRock-backed USDtb as the 100% backing asset for USDH, issued by the federally chartered bank Anchorage Digital. Ethena promises to return 95% of the net reserve profits to the Hyperliquid community, covering the migration costs from USDC to USDH, and providing at least $75 million in ecosystem incentives. The proposal emphasizes institutional-grade cash management and on-chain liquidity, with BlackRock's head of digital assets Robert Mitchnick stating that this will bring unique value to Hyperliquid users.

Paxos: As an experienced stablecoin issuer, Paxos emphasizes enterprise-level infrastructure and regulatory compliance (in line with GENIUS Act and MiCA standards). Its proposal allocates 95% of interest income for HYPE token buybacks and promises zero-fee migration for USDC. Paxos has deep integration with Hyperliquid ecosystem projects such as LHYPE and WHLP, receiving positive community feedback, which believes it can ensure the widespread adoption of USDH in the crypto outside world.

Sky Ecosystem (formerly MakerDAO): Proposes a multi-collateral scheme similar to USDS, supporting instant redemption of 2.2 billion USDC, and utilizes approximately 4.85% of the yield from USDH held by Hyperliquid for HYPE buybacks. Sky commits to investing 25 million USD to launch the “Hyperliquid Genesis Star” program to promote DeFi development and migrate a buyback engine with annual yields exceeding 250 million USD to the platform. This proposal leverages Sky's 8 billion USD balance sheet, emphasizing efficient returns and ecological growth.

Frax Finance: Provides a zero-interest rate model, with on-chain government bond yields flowing directly to Hyperliquid. Frax plans to natively issue USDH on Hyperliquid, pegged to frxUSD, supporting minting/redemption across USDC, USDT, and USD. This solution is seen as user-friendly, emphasizing fairness and Decentralization.

Other proposals such as the issuer-neutral Bridge technology of Native Markets, the decentralized CDP model of Curve Finance, and the alliance-based infrastructure of Agora each have their highlights. Agora founder Nick van Eck emphasized that 100% of the revenue is used for HYPE buybacks and received support from MoonPay, promising large-scale distribution. The differences in these proposals highlight the clash between traditional financial institutions and local DeFi teams. Observers believe that this competition is not only a battle for revenue but also a struggle for control over stablecoin governance.

Market Reaction and Controversy: Predictive Market Booms, Questions of Fairness Arise

This voting has attracted widespread attention, with prediction markets like Polymarket opening betting pools. Currently, Native Markets is in the lead, followed by Paxos in second place. The price of the HYPE token has soared, breaking a new high of 54 USD, with an increase of 3.4%. However, the competition is not smooth sailing. The existing stablecoin protocol Hyperstable accuses the USDH ticker of being previously “blacklisted,” forcing it to use USH, and questions the timing of the Native Markets proposal (suspected prior knowledge). Additionally, the Stripe-associated proposal has sparked backlash from the community, concerned that its vertical integration may lead to conflicts of interest. The entry of Ethena further intensifies the competition, seen as a challenge to Paxos and Frax.

On X (formerly Twitter), the community is lively in discussion. User @pana067 supports Paxos's balanced plan, stating that it “controls the stablecoin stack from A to Z”; @CamiRusso praises Hyperliquid's “genius” outsourcing strategy, which avoids legal and technical risks while forcing bidders to give concessions to HYPE holders. Some posts question the transparency of the voting, but the Hyperliquid Foundation confirms it will “abstain” to ensure community leadership.

DeFi governance experiments and industry turning points

This USDH contest is not only an internal matter for Hyperliquid, but also an experimental ground for the DeFi ecosystem. It demonstrates how to democratize stablecoin selection through on-chain voting, shifting yields from centralized issuers to the community. At the same time, it challenges Circle's dominance with USDC, indicating that the next generation of stablecoin infrastructure may be led by local DeFi teams.

With the proposal window closing, validator voting will take place on September 14th from 10:00 to 11:00 UTC, and the results will determine Hyperliquid's long-term independence. Regardless of who the winner is, this event will inject new vitality into the industry and is worth paying close attention to.