Sky Bets $8B to Control Hyperliquid’s Stablecoin Future

Sky, a decentralized finance (DeFi) platform formerly known as MakerDAO, has entered the competition to issue Hyperliquid’s USDH stablecoin, offering a compelling package that includes immediate liquidity, a substantial balance sheet, and a competitive yield. According to co-founder Rune, who shared the details on the X platform, USDH could receive $2.2 billion in liquidity from USDC for off-chain redemptions, significantly enhancing its utility and stability [2]. The firm is also prepared to deploy its over $8 billion balance sheet to Hyperliquid, bolstering the platform’s financial capacity [1].

In addition, Sky has outlined a 4.85% yield for all USDH on Hyperliquid, surpassing traditional government bond yields. This yield will be funneled into the HYPE buyback fund, creating a direct incentive for HYPE token holders and aligning with the interests of the broader Hyperliquid ecosystem [1]. The yield generation is projected to contribute to the token’s value appreciation and provide a sustainable model for USDH liquidity [2].

To further support USDH’s development, Sky plans to allocate $25 million toward an independent Hyperliquid Star project, enabling the self-development of DeFi applications on the platform [1]. Additionally, the company will migrate its buyback system to Hyperliquid, leveraging its annual profits—estimated at over $250 million—to further strengthen USDH liquidity and market presence [2]. This strategic move not only enhances USDH’s viability but also positions Sky as a key player in shaping Hyperliquid’s native financial ecosystem.

Hyperliquid, which currently relies on external stablecoins like USDC and USDT, is seeking to reduce its dependency on third-party assets by launching USDH. The stablecoin will trade under the USDH ticker and will be subject to validator voting for the issuance rights. This approach reflects a broader trend in DeFi where platforms aim to control their own stablecoin infrastructure to enhance autonomy and financial sustainability [4]. The platform has already attracted multiple major stablecoin issuers, including Paxos, Frax, Agora, and Native Markets, each offering distinct proposals to win the right to issue USDH [5].

Paxos, for instance, has proposed a model where 95% of interest earned from USDH reserves would go toward HYPE buybacks, which would be distributed proportionally to USDH holders and traders. The firm also plans to use Treasury bills and repurchase agreements to back USDH, ensuring compliance with U.S. and European regulations [4]. Frax, on the other hand, is proposing to issue USDH in conjunction with its frxUSD stablecoin, allowing cross-platform minting and redemption while aligning yield generation with community incentives [5]. Agora and Native Markets are also vying for the opportunity, each offering varying degrees of revenue sharing and infrastructure support [5].

Hyperliquid’s decision to seek a native stablecoin is a strategic move, especially given its recent record-breaking performance. The platform reported $106 million in perpetual futures trading revenue for August, capturing a 70% market share in DeFi perpetuals with $383 billion in monthly trading volume [4]. By introducing USDH, Hyperliquid aims to further solidify its market position while reducing reliance on external stablecoin providers. The outcome of the validator vote, scheduled for September 14, will determine which issuer will be entrusted with building and maintaining USDH [5].

Source: [1] Sky joins the competition for the issuance rights of the USDH stablecoin under Hyperliquid (https://www.weex.com/news/detail/sky-joins-the-competition-for-the-issuance-rights-of-the-usdh-stablecoin-under-hyperliquid-161962) [2] Sky joins the competition for issuing rights to Hyperliquid's USDH stablecoin (https://www.odaily.news/en/newsflash/447168) [3] Meet the bidders vying to build Hyperliquid's USDH stablecoin (https://www.dlnews.com/articles/defi/paxos-frax-agora-and-native-markets-compete-to-build-usdh-stablecoin/) [4] Paxos Proposes to Issue USDH Stablecoin for Hyperliquid (https://finance.yahoo.com/news/paxos-proposes-issue-usdh-stablecoin-113000004.html) [5] USDH Stablecoin Race Heats Up With Major Issuers (https://coinmarketcap.com/academy/article/usdh-stablecoin-race-heats-up-with-major-issuers)