Hyperliquid Validators to Vote on Stablecoin Future in DeFi Makeover

Hyperliquid, a decentralized exchange with a significant market presence in the DeFi space, is preparing to launch a new stablecoin, USDH, as part of its broader strategy to reduce dependency on existing stablecoin providers such as Circle. The exchange, which processed $398 billion in perpetual derivatives trading volume in August 2025, has initiated an on-chain governance vote to determine the issuer of USDH. The proposed stablecoin is intended to be backed by tokenized assets, with a focus on returning a substantial portion of the yield generated from its reserves to the Hyperliquid ecosystem. Validators will cast binding votes on September 14 to select the winning issuer from among several proposals.

Ethena, a decentralized finance protocol with $13 billion in total value locked (TVL), has submitted a proposal to issue USDH. If approved, Ethena plans to back the stablecoin using its USDtb, a stablecoin issued in collaboration with federally chartered bank Anchorage Digital and supported by BlackRock's tokenized money market fund, BUIDL. The proposal outlines a commitment to return 95% of the net revenue from USDH reserves to the Hyperliquid ecosystem and to cover the costs associated with migrating existing USDC trading pairs to USDH. This approach aligns with the broader objective of reducing reliance on USDC and capturing yield from Hyperliquid’s growing reserves.

BlackRock's involvement in the proposal underscores the increasing convergence between traditional financial institutions and DeFi infrastructure. Robert Mitchnick, BlackRock's head of digital assets, stated that Ethena’s USDtb is uniquely positioned to offer institutional-grade cash management and on-chain liquidity to Hyperliquid users. The backing of USDH by BUIDL, which has a $2.2 billion market cap and consistent yield, enhances the credibility and potential appeal of the stablecoin among validators and users.

The USDH initiative marks a significant shift in how decentralized protocols negotiate with stablecoin issuers. By opening a competitive bidding process, Hyperliquid is introducing a procurement model similar to those used in traditional finance. Issuers must now compete on transparency, yield-sharing, and infrastructure offerings, with validators serving as the decision-making body. This model not only strengthens governance within the Hyperliquid community but also introduces a new layer of accountability and competition in the stablecoin market.

Several other companies, including Paxos, Agora, and Sky, have also submitted proposals to issue USDH, each offering different combinations of compliance, yield-sharing, and liquidity. For example, Paxos has proposed a 95% yield return to HYPE buybacks, while Frax Finance has pledged to share 100% of its yield directly with Hyperliquid users. Agora, backed by institutional investors and supported by VanEck, has promised to redirect 100% of its net revenue to HYPE buybacks and liquidity incentives. The final decision, however, will rest with the Hyperliquid validators, who will evaluate these proposals based on the outlined criteria and community alignment.

The implications of USDH extend beyond Hyperliquid. The stablecoin could serve as a model for other DeFi projects seeking to assert greater control over their liquidity and revenue streams. By redirecting yield back into the ecosystem, Hyperliquid aims to create a self-sustaining cycle of growth and value creation. This approach could challenge the dominance of existing stablecoins like USDC and USDT, which have long served as the backbone of crypto trading and cross-border payments.