Validators Battle for DeFi’s Next Big Stablecoin Prize

Hyperliquid’s USDH stablecoin has become the focal point of a growing competition among crypto firms, with Ethena Labs joining the fray as the sixth contender. The USDH initiative, tied to $5 billion in liquidity on Hyperliquid’s derivatives exchange, has drawn proposals from a range of industry players, including Paxos, Frax, Agora, Native Markets, and Sky (formerly MakerDAO). Ethena’s entry intensifies the contest for control of the stablecoin, which is viewed as a pivotal asset for the platform’s growth.

Ethena’s proposal outlines a USDH stablecoin fully backed by its USDtb stablecoin, which is tied to BlackRock’s BUIDL fund and will be issued through Anchorage Digital Bank. The firm has pledged to return 95% of USDH reserve revenue to the Hyperliquid community and introduced a “guardian network” of validators to oversee USDH operations. This structure aims to decentralize oversight and mitigate risks associated with a single issuer.

In addition to its governance model, Ethena has committed to covering the costs of migrating Hyperliquid’s markets from USDC to USDH and offered $75 million in ecosystem incentives, with potential growth to $150 million. The firm also plans to integrate USDe and USDtb into HyperEVM and launch a synthetic dollar called hUSDe, further expanding the utility of its stablecoin infrastructure.

Ethena’s bid follows previous proposals from other market participants. Native Markets suggested using Stripe’s Bridge payment processor for USDH, while Sky, the rebranded MakerDAO, proposed a USDH backed by its own resources with a 4.85% yield. Agora, supported by VanEck and MoonPay, pledged to return 100% of USDH reserve revenue to the community. Ethena’s entry adds momentum to the USDH race, particularly given its rapid ascent in the stablecoin market, with USDe reaching a market value of $12.9 billion as of its latest data.

Hyperliquid’s announcement of the USDH issuer selection process has already had a tangible impact on its native token, HYPE, which reached an all-time high of $55.04 following the news. The final decision will be made after Hyperliquid’s next network upgrade, with validators casting their votes. This competition underscores the importance of stablecoins in DeFi ecosystems and the strategic value of securing liquidity and revenue streams through governance decisions.

The USDH process highlights the broader trend of DeFi platforms seeking stablecoin solutions that offer both security and community alignment. As the race progresses, Hyperliquid’s validators will weigh the proposals based on their financial incentives, governance models, and long-term strategic fit.