Hyperliquid's USDH Stablecoin Vote Nears, Paxos Emerges as Strong Contender

Hyperliquid, a decentralized exchange for perpetual futures, has been making significant strides in the cryptocurrency industry. One week after opening a contest to decide the issuer of its first native stablecoin, USDH, Hyperliquid is preparing for a validator vote on Sunday to select the winner. This decision is closely watched within the industry as it will determine which company controls the exchange’s canonical stablecoin and gains access to billions in stablecoin flows.

The race for the USDH issuer has seen several twists. On Thursday, Ethena withdrew its bid and endorsed newcomer Native Markets. This leaves Paxos, Frax, Sky, Agora, Curve, OpenEden, and Bitgo still in contention. Native Markets was the first team to file a proposal for USDH, pledging to mint USDH directly on HyperEVM and split reserve yield evenly between HYPE buybacks and ecosystem growth. Their plan relies on Stripe’s tokenization platform, Bridge, to manage reserves, which has sparked both support and criticism from competitors.

Paxos, a stablecoin infrastructure company, submitted a proposal to launch USDH designed to comply with both the US Stablecoins Act and the European Union’s Markets in Crypto-Assets framework. Paxos pledged to direct 95% of the interest generated from USDH reserves toward buying back Hyperliquid’s native token HYPE and redistributing it to validators, users, and partner protocols. Paxos also plans to integrate USDH into its brokerage platform, which is already used by PayPal and Venmo.

Sky, an Ethereum decentralized finance pioneer, submitted its proposal to make USDH natively multichain via LayerZero, allowing the token to circulate across networks from day one. Sky also committed to deploying part of its balance sheet into Hyperliquid, offering the community a 4.85% return on USDH, and directing profits toward HYPE buybacks and the Assistance Fund.

Frax Finance, a decentralized finance protocol, outlined its proposal to issue USDH through a partnership with a federally regulated US bank. The plan would back USDH one-for-one with tokenized US Treasurys, ensure full GENIUS Act compliance, and recycle the entire treasury yield into Hyperliquid’s ecosystem. Frax described its approach as giving everything back to the community.

Agora, the issuer of the AUSD stablecoin, put forward a proposal to launch USDH with VanEck as asset manager. Agora criticized Native Markets’ reliance on Stripe’s Bridge, warning of potential conflicts of interest for Hyperliquid. Agora pledged to direct 100% of net revenue from reserves into HYPE buybacks or the Assistance Fund.

Three last-minute bids were submitted on Sept. 10, the final day of the proposal window, from Curve, OpenEden, and BitGo. These bids have not yet appeared on Polymarket’s prediction markets.

The USDH vote marks Hyperliquid’s first major governance decision beyond routine asset delistings. Voting will occur entirely onchain between 10:00 and 11:00 UTC on Sunday, with validator power determined by the amount of HYPE tokens staked and delegators free to shift their support. A proposal must win two-thirds of the total stake to pass, though the Hyperliquid Foundation and staking provider Kinetiq, which control about 63% of tokens, have pledged to abstain.

Hyperliquid has consistently outperformed traditional finance giants in terms of volume and net income. DefiLlama data estimates Hyperliquid’s annualized net income at $1.24 billion as of Sept. 12, exceeding Nasdaq’s $1.12 billion net income for the entirety of 2024 by 11%. Hyperliquid’s 11-person team generates approximately $113 million per employee, establishing the highest net income-to-employee ratio in global financial markets.

The trading protocol posted $420.3 billion in total trading volume during August, extending its winning streak against Robinhood to four consecutive months. Robinhood published August trading figures on Sept. 11, revealing $227.5 billion in total volume across all products. Hyperliquid processed $398 billion in perpetual contracts and $22.3 billion in spot trading during the same period, creating a $170.5 billion volume advantage over the retail trading platform. The August performance marks the platform’s strongest monthly showing since beginning its winning streak against Robinhood.

Hyperliquid’s performance demonstrates how decentralized exchanges can compete directly with established retail trading platforms while maintaining lean operational structures that generate outsized returns per employee.

Hyperliquid has demonstrated significant ecosystem growth throughout 2025, marked by substantial increases in key operational metrics across its Layer 1 network. The platform saw its total value locked reach unprecedented levels, showcasing robust expansion compared to the start of the year. This growth is driven primarily by prominent applications built on the network, including Kinetiq, Pendle, Hyperliquid itself, Hyperlend, and Morpho. Concurrently, the platform has established itself among the leading chains in the cryptocurrency sector based on its decentralized exchange volume.

A critical focus within the ecosystem remains the development and selection process for its upcoming USDH stablecoin. The first governance vote concluded recently, featuring competitive proposals from stablecoin providers such as Native Markets, Paxos, Frax, Sky, and Agora. To enhance fairness and community influence, Hyperliquid modified the voting structure, specifically removing the influence of its native $HYPE tokens. This adjustment, combined with delegated stake voting, led Paxos to emerge as a strong contender, particularly noted for its significant yield allocation to HYPE buybacks.

The stablecoin infrastructure itself is also advancing. Observers detected test transactions for Circle's USDC stablecoin occurring on HyperEVM's mainnet. This activity strongly suggests that plans for a native deployment of USDC on the Hyperliquid network are progressing, potentially expanding its stablecoin liquidity options. However, the process has seen significant developments, with Ethena Labs withdrawing its proposal to issue the USDH stablecoin following opposition from the community and other ecosystem participants.

Platform activity on Hyperliquid's core perpetual trading product surged to new highs, recording its highest monthly trading volume in August. Revenue generation also reflected this heightened activity, achieving a peak monthly revenue figure during the same period. These cumulative revenues place Hyperliquid among the more consistently profitable networks in the cryptocurrency industry. The protocol enforces a mechanism where a significant majority of generated fees are allocated towards automated token buybacks and burns.

Beyond stablecoins, the broader Hyperliquid ecosystem shows potential for further expansion. Observers speculate the platform may evolve into a hub for airdrops, particularly with high-profile token launches anticipated on its infrastructure. The introduction of the USDH stablecoin is seen as a potential catalyst for new mechanisms, including airdrop farming opportunities that could attract further user engagement and capital to the platform.