Hyperliquid’s USDH Could Redefine Stablecoin Independence

Native Markets, a team within the Hyperliquid ecosystem, has been selected to issue the USDH stablecoin, a move that marks a significant step in the platform’s strategy to decentralize its financial infrastructure. The USDH ticker was awarded to Native Markets following a governance vote by Hyperliquid’s validator community, in which a two-thirds supermajority of staked HYPE tokens supported the proposal. The team plans to launch USDH in a test phase “within days,” beginning with limited minting and redemption caps before scaling to full availability.

The selection process for USDH attracted bids from some of the most prominent players in the stablecoin and crypto infrastructure sectors, including Paxos, BitGo, Frax, and Ethena. Despite this competitive landscape, Native Markets was heavily favored by prediction markets and ultimately won the vote. According to the proposal, USDH will be fully backed by cash and U.S. Treasury equivalents, with off-chain reserves managed by BlackRock and on-chain reserves handled by Superstate through Stripe-owned Bridge. The stablecoin will be issued natively on Hyperliquid’s HyperEVM network, with reserve yields split between HYPE buybacks and programs to expand USDH’s distribution.

The USDH proposal emphasizes a deep alignment with the Hyperliquid ecosystem. Native Markets, co-founded by Max Fiege, Anish Agnihotri, and MC Lader, positions itself as the only team combining extensive Hyperliquid experience, trading expertise, institutional credibility, and regulatory resilience. The team’s plan includes launching USDH with a capped initial phase to ensure operational safety before removing limits and expanding liquidity. The token will be listed as a quote asset against USDC, and the team has committed to distributing 50% of the reserve yield to HYPE buybacks and 50% to USDH growth initiatives, including partnerships and user incentives.

The emergence of USDH presents a potential challenge to Circle’s USDC, which dominates the dollar-backed stablecoin market on Hyperliquid. According to DefiLlama data, approximately $6 billion in USDC reserves are held on the platform. However, USDC and other stablecoins will continue to be supported on Hyperliquid as long as they meet certain thresholds, including a 200,000 HYPE stake (worth about $10 million), a robust $1 peg mechanism, and minimum depth against USDC and HYPE.

The USDH bidding process also sparked broader discussions about the future of stablecoins and governance within decentralized platforms. Some industry observers raised concerns about the selection process, with Haseeb Qureshi, managing partner at Dragonfly, describing it as a “farce” due to perceived favoritism toward Native Markets. Others, such as Mert Mumtaz of Helius, speculated that stablecoin tickers may eventually be abstracted into a generic “USD” to avoid fragmentation and simplify user experience.

Ethena, one of the major contenders, had previously submitted a proposal offering USDH backed by its USDtb stablecoin, which is fully collateralized by U.S. Treasuries and backed by BlackRock’s BUIDL fund. The team proposed a 95% reserve yield split for Hyperliquid and a $75 million ecosystem fund, which could grow to $1.5 billion. Despite its strong institutional backing and deep DeFi integration, Ethena withdrew from the race, paving the way for Native Markets to secure the ticker with over 99% odds on Polymarket.

The USDH initiative represents a pivotal moment for Hyperliquid, which has already established itself as a dominant player in the perpetual derivatives market. With nearly 80% of the market share in on-chain perpetual DEX trading and over $50 billion in TVL, the platform has demonstrated its ability to scale and innovate. USDH is seen as a strategic tool to reduce dependency on external stablecoins and redirect revenue flows back into the Hyperliquid ecosystem through HYPE buybacks and validator incentives.

As the USDH rollout progresses, the success of the token will depend heavily on the execution of its reserve management, liquidity provision, and governance alignment. Native Markets has emphasized its commitment to transparency and community-driven governance, but the long-term sustainability of the model will require robust operational execution and regulatory clarity. The launch of USDH could set a precedent for how decentralized platforms manage their financial infrastructure and engage with institutional partners in the evolving stablecoin landscape.