One week after opening a contest to decide the issuer of its first native stablecoin, USDH, Hyperliquid is preparing for a validator vote on Sunday to select the winner in what has quickly become one of the industry’s most closely watched community decisions.
Hyperliquid, a decentralized exchange for perpetual futures that launched its own layer-1 in November 2024, handled $330 billion in trading volume in July with a team of 11 people. USDH will serve as the platform’s first dollar-pegged asset, providing traders with a stable unit of account and collateral option within the Hyperliquid ecosystem.
The vote will decide which company controls the exchange’s canonical stablecoin and gains access to billions in stablecoin flows.
The race has already seen twists. On Thursday, Ethena withdrew its bid and endorsed newcomer Native Markets. That leaves Paxos, Frax, Sky, Agora, Curve, OpenEden and Bitgo still in contention.
Related: DeFi whale loses $40M as Kinto winds down and SwissBorg suffers hack: Finance Redefined
Native Markets
Native Markets was first team to file a proposal for USDH, which it did on Sept. 5.
Explicitly formed to launch a Hyperliquid-native stablecoin, the group pledged to mint USDH directly on HyperEVM and split reserve yield evenly between HYPE buybacks and ecosystem growth.
Its plan relies on Stripe’s tokenization platform, Bridge, to manage reserves. This choice won early validator backing but also sparked pushback from competitors warning of potential conflicts with Stripe’s blockchain ambitions.
Hyperliquid investor Max Fiege, former Uniswap Labs resident MC Lader and blockchain researcher Anish Agnihotri lead the venture.
Native Markets’ current odds on Polymarket: 96%.
Paxos
Also on Sept. 5, stablecoin infrastructure company Paxos submitted a proposal to launch USDH, a Hyperliquid-first stablecoin designed to comply with both the US Stablecoins Act (GENIUS Act) and the European Union’s Markets in Crypto-Assets (MiCA) framework.
The filing stated that 95% of the interest generated from USDH reserves would be directed toward buying back Hyperliquid’s native token HYPE and redistributing it to validators, users and partner protocols.
“We are the only firm that has launched and scaled multiple regulated stablecoins, including Binance USD to $25B+ and PayPal USD to $1B+,” Paxos said in its announcement.
Paxos also pledged to integrate USDH into its brokerage platform, already used by PayPal and Venmo.
Paxos’ current odds on Polymarket: 4%.
Sky
On Sept. 8, Ethereum decentralized finance (DeFi) pioneer Sky, the issuer of the decentralized stablecoin USDS (formerly DAI), submitted its proposal. Sky’s pitch stands out for pledging to make USDH natively multichain via LayerZero, allowing the token to circulate across networks from day one.
The team also committed to deploying part of its balance sheet into Hyperliquid, offering the community a 4.85% return on USDH, and direct profits toward HYPE buybacks and the Assistance Fund.
Sky’s current odds on Polymarket: less than 1%.
Frax Finance
Decentralized finance protocol Frax Finance, issuer of the frxUSD stablecoin, outlined its proposal to issue USDH through a partnership with a federally regulated US bank, though the bank was not named.
The plan would back USDH one-for-one with tokenized US Treasurys, ensure full GENIUS Act compliance, and recycle the entire treasury yield into Hyperliquid’s ecosystem.
Frax described its approach as “something no one else will match: give everything back to the community.”
Frax Finance’s current odds on Polymarket: less than 1%.
Agora
Also on Sept. 8, Agora, the issuer of the AUSD stablecoin, put forward a proposal to launch USDH with VanEck as asset manager. The bid proposal features a commitment to direct 100% of net revenue from reserves into HYPE buybacks or the Assistance Fund.
Agora also sharply criticized Native Markets’ reliance on Stripe’s Bridge, warning that Stripe’s plans for its own Tempo blockchain could create conflicts of interest for Hyperliquid.
“If Hyperliquid relinquishes its canonical stablecoin to Stripe, a vertically integrated issuer with clear conflicts, what are we all even doing? We strongly urge caution against using Stripe (Bridge) as an issuer,” Nick VanEck, co-founder of Agora, said on X.
Agora’s current odds on Polymarket: less than 1%.
The remaining competitors
Three last-minute bids were submitted on Sept. 10, the final day of the proposal window, and have not yet appeared on Polymarket’s prediction markets.
They came from Curve, the Ethereum-based decentralized exchange known for its stablecoin pools; OpenEden, a real-world asset tokenization platform; and BitGo, a US crypto custodian and trust company.
Related: BitGo files for US IPO as crypto custody business surpasses $100B
How the USDH vote will work
The USDH vote marks Hyperliquid’s first major governance decision beyond routine asset delistings. Voting will occur entirely onchain between 10:00 and 11:00 UTC on Sunday, with validator power determined by the amount of HYPE tokens staked and delegators free to shift their support.
A proposal must win two-thirds of the total stake to pass, though the Hyperliquid Foundation and staking provider Kinetiq — which control about 63% of tokens — have pledged to abstain.
The buildup to the vote has coincided with a rally in HYPE, which hit a new all-time high of $57.30 on Friday, according to data from CoinGecko.
Magazine: TradFi is building Ethereum L2s to tokenize trillions in RWAs — Inside story