Hyperliquid's stablecoin bidding war begins: Who will become the issuer of USDH?
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Hyperliquid's stablecoin bidding war begins: Who will become the issuer of USDH?
Competing multi-party proposals, with the highest commitment offering 100% returns to the community.
Navigating Web3 tides with focused insightsAuthor: Paul | Shoal
Translation: TechFlow
With @HyperliquidX planning to launch USDH, we've seen major contenders racing to win issuance rights, even promising up to 100% of reserve interest and revenue returned to the Hyperliquid community.
A quick recap for those unfamiliar:
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Stablecoins are central to Hyperliquid's business model, just like any perpetual futures exchange.
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The current stablecoin supply on HyperEVM is approximately $5.72 billion, with about 95% being USDC. In other words, roughly 95% of the stablecoin supply on Hyperliquid is currently freezeable.
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Clearly, this situation is neither sustainable nor desirable for Hyperliquid. The need for a native Hyperliquid stablecoin has been discussed for some time.
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Interestingly, Hyperliquid is now letting its token holders vote on who will become the native issuer of USDH.
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Issue USDH in full compliance with GENIUS/MiCA standards, featuring global banking rails and fiat on/off ramps.
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Allocate 95% of USDH reserve interest toward HYPE buybacks.
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Notably, @paxoslabs recently acquired Molecular Labs, the team behind LHYPE and WHLP.
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Issue USDH pegged 1:1 to frxUSD (which itself is backed by tokenized U.S. Treasuries).
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Return 100% of USDH reserve yields to Hyperliquid, taking zero cut from Frax.
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USDH will support multi-chain deployment instantly (on any chain where frxUSD exists), while remaining native to HyperEVM.
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Issue globally compliant USDH cross-chain from day one.
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Distribute a "meaningful share" of reserve yields to a relief fund.
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Mint USDH directly on HyperEVM and enable HyperCore transfers from day one.
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Issue USDH cross-chain with globally compliant on/off ramp infrastructure.
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Allocate 100% of net income from USDH treasury assets to a relief fund or toward HYPE buybacks.
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Leverage a partner coalition to minimize centralized dependencies (including agora, @raincards, @LayerZero_Core, and @vaneck_us).
Some thoughts
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Revenue sharing matters (very much!), but I don't think it will be deal-breaking. We've already seen most bidders offering high percentages of revenue toward HYPE buybacks. Small differences (e.g., 5–10%) won't really shift the needle (like Ethena’s 100% vs Paxos’ 95%).
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Compliance does enable a better fiat on/off ramp experience, but also introduces potential freeze risks.
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Multi-chain distribution should be prioritized—especially enabling easy access to USDH from other chains, minimizing middleware or intermediary contracts. Still, I don't believe this alone would be decisive.
Many people have suggested @ethena_labs, or at least expressed curiosity whether they'll bid. This could be a great opportunity for Ethena to surpass Circle. However, I don’t think the Hyperliquid community would accept Ethena—their competitive relationship and potential conflicts make things too complicated. That said, I wouldn't be surprised if they do submit a bid.
I can also imagine @M0, @paypal, and @SkyEcosystem submitting bids. Additionally, I agree with @jon_charb : nobody is talking about Circle itself bidding, but that possibility is definitely worth watching.
On the other hand, some have proposed blacklisting USDH's code and having the foundation build an internal stablecoin themselves. That’s an interesting path too. Still, I don’t think the Hyperliquid Foundation has interest in building a stablecoin from scratch.
In summary, the proposal deadline is September 10th, and I expect we’ll see one or two more impressive submissions. I'm just here for the show and enjoying the competition. Regardless of who wins, the quality of bidders speaks volumes.
May the best bidder win, Hyperliquid.
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