DeFi’s Power Shift: Hyperliquid Challenges Stablecoin Giants with Governance Auction

Altcoins Rally as Hyperliquid, Chainlink, and Hedera Capture Market Momentum

Hyperliquid, a leading decentralized exchange in the decentralized finance (DeFi) ecosystem, has drawn significant attention as it moves to launch its own stablecoin, USDH, in a public on-chain auction. The platform, which handles over $378 billion in trading volume on a monthly basis, currently relies heavily on Circle’s USDC and Tether’s USDT for spot market operations. With nearly $5 billion in deposits currently flowing into USDC, Hyperliquid’s USDH initiative aims to redirect this yield back into its community, challenging the dominance of third-party stablecoins. Validators will vote on which issuer—among a list of prominent contenders including Paxos, Frax, and Agora—will manage the USDH reserves. This auction marks a shift toward decentralized governance, where protocols can negotiate vendor contracts transparently and competitively. The outcome could significantly impact Circle’s revenue, which relies on approximately $150–200 million annually from USDC deposits tied to Hyperliquid’s ecosystem.

The competitive landscape for USDH is defined by distinct proposals from major stablecoin issuers. Paxos, a New York-based fintech firm known for its PayPal USD and Global Dollar stablecoins, has positioned itself as a compliance-focused contender. Its proposal includes backing USDH with U.S. Treasury Bills and repurchase agreements while allocating 95% of the interest earned to HYPE token buybacks. Frax Finance, a prominent DeFi protocol, aims to offer a community-aligned model by issuing USDH backed 1:1 by its frxUSD stablecoin and Treasuries managed by asset managers like BlackRock. Agora, supported by VanEck and Paradigm, brings institutional credibility with a plan to redirect 100% of net revenue toward HYPE buybacks and community incentives. These proposals highlight the diverse strategies issuers are deploying to capture Hyperliquid’s influential validator base.

Hyperliquid’s move reflects a broader trend of DeFi platforms asserting control over their financial infrastructure. The USDH auction is not merely a technical upgrade but a strategic redefinition of stablecoin economics. By forcing issuers to compete on transparency and yield-sharing, Hyperliquid is setting a precedent for how decentralized protocols can negotiate with centralized financial players. The model introduces a procurement-like process to DeFi, where community stakeholders vote on which vendor best aligns with their interests. This approach could inspire other DeFi projects to adopt similar governance frameworks, shifting the balance of power in favor of decentralized communities.

Meanwhile, Chainlink (LINK) has regained traction, supported by its robust oracle infrastructure and expanding ecosystem. The token has outperformed the broader crypto market in recent weeks, with a 15.30% increase over the past seven days. Chainlink’s role in connecting blockchain networks with real-world data remains critical, particularly as enterprises adopt decentralized solutions for data verification and smart contract execution. Analysts have noted that Chainlink’s recent partnerships and node network upgrades could further enhance its market position, particularly in cross-chain and institutional use cases. The token’s performance underscores the continued relevance of oracle networks in enabling trustless, decentralized finance applications.

Hedera (HBAR) has also seen a rise in volume and momentum, bolstered by its selection to host Wyoming’s Frontier Stable Token (FRNT). As the first U.S. state-issued stablecoin, FRNT is fully backed by U.S. dollars and short-term Treasuries and is designed to support public finance initiatives, including emergency disbursements and education funding. Hedera’s low-fee, high-throughput network, capable of processing 10,000 transactions per second, aligns with the requirements of real-world government operations. The expansion of FRNT to Hedera highlights the growing recognition of the platform’s governance and compliance capabilities, particularly in the public sector. Hedera’s carbon-negative, enterprise-grade infrastructure has attracted institutional trust, further solidifying its role in the evolving stablecoin landscape.

The broader altcoin market has responded positively to these developments, with increased trading volumes and price appreciation across key projects. Hyperliquid’s HYPE token, for instance, has seen a 173.50% surge in 24-hour trading volume, reflecting strong whale accumulation and investor confidence. Chainlink and Hedera’s recent price movements indicate a market appetite for DeFi infrastructure and governance-driven projects. As protocols continue to innovate in stablecoin design, yield optimization, and decentralized governance, the altcoin sector is likely to see further momentum, particularly as institutional and public sector adoption accelerates.

Source:

[1] 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 & More (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] US First State-issued Stablecoin FRNT Expands on Hedera (https://beincrypto.com/us-first-state-issued-stablecoin-frnt-expands-on-hedera-price-recovers/)

[5] Hedera Selected for Wyoming's Frontier Stable Token (FRNT) (https://www.prnewswire.com/news-releases/hedera-selected-for-wyomings-frontier-stable-token-frnt-the-first-us-state-issued-stable-token-302546583.html)