Hyperliquid to Vote on USDH Stablecoin Issuer September 14 Amidst Fierce Competition

Hyperliquid is set to conduct a crucial validator vote on September 14, 2025, to decide the official issuer of its proprietary stablecoin, USDH. This strategic move aims to decrease Hyperliquid's dependence on existing stablecoins like USDC and to secure substantial revenue streams for its ecosystem.

The competition to become the USDH issuer is intense, with several prominent crypto entities submitting proposals. Among the key contenders are Paxos, known for its regulatory focus and partnerships with PayPal and Venmo; Frax Finance, which emphasizes a community-first approach and projects significant yield revenue; Agora, highlighting neutrality and a 100% net revenue sharing model with partners Rain and LayerZero; and Ethena, which has garnered attention for its backing by BlackRock's BUIDL fund. Robert Mitchnick, BlackRock's head of digital assets, has commented on the potential of such institutional backing.

Other notable participants include Sky (formerly MakerDAO), offering a 4.85% yield and multichain capabilities via LayerZero, and Native Markets, which has proposed a hybrid reserve model incorporating BlackRock and Superstate/Stripe. Frax Finance estimates that Hyperliquid's stablecoin deposits could generate approximately $220 million in annual yield revenue at a 4% Annual Percentage Rate (APR).

A significant incentive offered by many bidders, including Paxos and Ethena, is the plan to allocate around 95% of the interest generated from USDH reserves towards HYPE token buybacks or an Assistance Fund. This strategy is designed to directly benefit the Hyperliquid ecosystem and its native token, HYPE, by creating continuous demand and potentially driving its value.

The outcome of this competition is poised to have a considerable impact on Hyperliquid's financial autonomy and the broader decentralized finance landscape. The chosen issuer's model could establish a precedent for other decentralized exchanges seeking to enhance their financial infrastructure and revenue generation capabilities.