Solana News Today: Hyperliquid’s USDH Auction Rivals Circle’s Stablecoin Dominance

Hyperliquid, the leading decentralized perpetual futures exchange in the DeFi ecosystem, is preparing to launch its own stablecoin, USDH, in a move that could significantly reduce its reliance on third-party stablecoins like Circle’s USDC. The platform, which processed over $378 billion in trading volume in the past month, has opened an on-chain auction for the stablecoin’s issuance, allowing validators to choose from competing proposals that outline how yield from USDH reserves will be shared and managed. This initiative reflects a strategic shift in how decentralized finance protocols negotiate with institutional partners, emphasizing transparency and community governance in the procurement of financial services [1].

The USDH auction has attracted several high-profile bidders, each offering different approaches to managing the stablecoin’s reserves and distributing its yields. Paxos, a regulated fintech firm known for its PayPal USD stablecoin, has proposed a model where 95% of the interest earned from reserves would fund HYPE token buybacks, with the remaining 5% allocated for operational costs. The firm plans to back USDH with U.S. Treasury Bills and repurchase agreements, while also promising to list HYPE on major platforms like PayPal and Venmo. Frax Finance, a leading DeFi protocol, proposed a community-aligned model where USDH would be backed by its frxUSD stablecoin and yield would be shared directly with Hyperliquid users. Meanwhile, Agora, supported by institutional players such as Nick van Eck and Paradigm, has offered a full yield share and institutional-grade liquidity, with plans to integrate USDH across multiple fiat on-ramps and cross-chain protocols [1].

Hyperliquid’s validators—holders of the HYPE token who stake their assets to secure the network—will ultimately decide which proposal to adopt. The decision, expected by mid-September, will determine how the platform’s $5 billion in deposits are managed and whether Circle will face a significant loss of revenue from its USDC yield. Circle currently generates over 99% of its revenue from interest income on USDC reserves, and if USDH gains traction, the firm could lose up to $150–200 million annually. The timing is critical for Circle, as delays in launching its native USDC on Hyperliquid have allowed the platform to pivot to a self-sustaining stablecoin ecosystem [1].

The USDH initiative is also a test case for how decentralized governance can be applied to financial infrastructure. Unlike traditional token votes on minor fee adjustments, Hyperliquid’s auction represents a more substantive negotiation over the allocation of capital and risk. By opening the stablecoin’s governance to competitive bidding, the protocol is forcing issuers to align their incentives with the Hyperliquid community. This approach could set a precedent for future DeFi projects, where transparency and performance become central to vendor selection rather than opaque, backroom deals [1].

In parallel with Hyperliquid’s strategic shift, institutional investors are showing increased interest in the HYPE token. Lion Group, a Singapore-based trading platform listed on Nasdaq, has committed $600 million to a crypto treasury focused on HYPE and other altcoins. The firm plans to gradually convert its holdings in Solana (SOL) and SUI into HYPE, citing the token’s potential as the backbone of a decentralized trading infrastructure. CEO Wilson Wang has described the move as a disciplined accumulation strategy aimed at enhancing portfolio efficiency and positioning Lion Group for long-term growth in the crypto sector. The company has already acquired over 128,000 HYPE tokens and aims to expand its holdings as BitGo launches institutional custody solutions for the token in the U.S. [4].

The growing institutional interest in HYPE has also been reflected in its price performance. On September 8, the token reached a new all-time high of $51.84, according to CoinGecko. This surge has been fueled by a combination of market optimism and strategic moves by firms like Lion Group and Hyperion DeFi, which have acquired large quantities of HYPE. The broader market has responded positively, with Lion Group’s stock price rising over 11% following its announcement to shift its crypto holdings toward HYPE [5]. The token’s upward trajectory underscores the increasing recognition of Hyperliquid’s role in the evolving DeFi landscape and its potential to redefine how yield is generated and distributed within the ecosystem [1].

Source:

[1] Tomer Niv, "Circle's Revenue At Risk As Hyperliquid Opens Auction For USDH", https://www.forbes.com/sites/tomerniv/2025/09/08/circles-revenue-at-risk-as-hyperliquid-opens-auction-for-usdh/

[2] "Hyperliquid Price: HYPE Live Price Chart, Market Cap & ...", https://www.coingecko.com/en/coins/hyperliquid

[3] "Meet the bidders vying to build Hyperliquid's USDH stablecoin", https://finance.yahoo.com/news/meet-bidders-vying-build-hyperliquid-152805117.html

[4] "Lion Group Bets Big on Altcoins With $500M Hyperliquid ...", https://cryptodnes.bg/en/lion-group-bets-big-on-altcoins-with-500m-hyperliquid-strategy/

[5] "Lion Group Shifts to HYPE as Token Hits New All-Time High", https://cointelegraph.com/news/lion-group-buys-hype-token-sells-solana-sui