Inside the Hyperliquid stablecoin race: The companies vying for USDH

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 industrys 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 platforms 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 exchanges 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.

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.

Source: Haseeb Qureshi

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 Unions Markets in Crypto-Assets (MiCA) framework.

The filing stated that 95% of the interest generated from USDH reserves would be directed toward buying back Hyperliquids native token HYPE and redistributing it to validators, users and partner protocols.

Source: David Weber

“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. Skys pitch stands out for pledging to make USDH natively multichain via LayerZero, allowing the token to circulate across networks from day one.

Source: Rune Christensen

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.

Skys 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 Hyperliquids ecosystem.

Source: Frax Finance

Frax described its approach as “something no one else will match: give everything back to the community.”

Frax Finances 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 Stripes 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.

Agoras 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 Polymarkets 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.

Source: Galaxy Research

How the USDH vote will work

The USDH vote marks Hyperliquids 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.