Sky Joins USDH Competition, Offers $2.2B Liquidity, 4.85% Yield

Sky, a prominent player in the cryptocurrency space, has joined the competition to issue USDH, a stablecoin backed by Hyperliquid. Sky's co-founder, Rune, highlighted several key advantages that Sky brings to the table for Hyperliquid's USDH. These include providing USDH with $2.2 billion in instant liquidity from USDC for off-chain redemption, deploying its over $8 billion balance sheet to Hyperliquid, and offering a 4.85% yield on all USDH, which is higher than government bond yields. Additionally, Sky plans to create an independent Hyperliquid Star project with $25 million and migrate its buyback system to Hyperliquid, leveraging over $250 million in annual profits to build USDH liquidity.

Circle, the issuer of USDC, has been benefiting from the vast reserves backing its stablecoin, earning roughly $200 million a year in yield from the $5.5 billion in stablecoins parked on Hyperliquid. This revenue amounts to almost 10% of Circle’s annual income, which has been a crucial part of its business model. However, Hyperliquid, a decentralized exchange with significant trading volume, has decided to change the rules by proposing its own native stablecoin, USDH. The proposal aims to share the yield generated by USDH with the ecosystem, including paying validators, funding the assistance pool, and buying back and supporting the HYPE token. This revenue redistribution could generate over $1 billion annually for the ecosystem, potentially reversing Circle’s current monopoly.

Hyperliquid's proposal for USDH has sparked intense competition among several heavyweight teams vying for the right to issue the stablecoin. Leading contenders include Paxos, a regulated stablecoin issuer, and Agora, a coalition of major players in the crypto space. Additionally, Ethena Labs and other challengers are preparing bids, and there are rumors that Stripe, fresh off launching its own layer-1 blockchain Tempo, is also preparing a bid. The competition highlights the growing power of decentralized exchanges and the potential for significant revenue redistribution within the ecosystem.

Paxos has introduced a proposal for USDH, emphasizing compliance, revenue-sharing, and HYPE buybacks to strengthen Hyperliquid’s growth. The stablecoin will be issued under the GENIUS Act and meet the requirements of the European Union’s MiCA regulation, ensuring regulatory clarity across major markets. Paxos plans to use its extensive network of financial partners for distribution and aims to make USDH suitable for institutions and fintech platforms. The proposal also includes a revenue-sharing model where 95% of the yield from USDH reserves will go to repurchasing HYPE tokens, redistributing them to validators, builders, and users. This design aligns incentives within the network and encourages growth. Paxos Labs, a newly formed division, will lead the project and oversee the launch, with the decision now resting with the Hyperliquid community and validators.

Hyperliquid has become a major platform for decentralized perpetual futures trading, processing nearly $400 billion in trading volume last month and generating over $106 million in revenue. This positions Hyperliquid as one of the largest decentralized exchanges in activity, behind only Uniswap and PancakeSwap in weekly trading volume. With USDH, Paxos aims to strengthen Hyperliquid’s ability to attract institutional traders and global users by deploying USDH across both HyperEVM and HyperCore chains. The proposal reflects Paxos’s strategy of combining regulatory compliance with revenue models that support network growth, potentially serving as a bridge between traditional finance and Hyperliquid’s decentralized infrastructure.

The Hyperliquid USDH ticker vote is an on-chain validator decision to assign the USDH ticker on September 14, 2025, from 10:00 to 11:00 UTC. Validators will weigh proposals submitted by September 10, with declarations by September 11, enabling community oversight of ticker assignment and increased governance transparency. The vote can shift competitive dynamics by validating a USDH issuer within Hyperliquid’s ecosystem, potentially attracting institutional interest and reducing spot trading fees. The process prioritizes on-chain records and community transparency to reduce centralized control over ticker assignments, with key dates including proposal submissions by September 10, validator support declarations by September 11, and the official on-chain vote on September 14, 2025. Community members can monitor proposal publications, review on-chain records, and engage with validators through governance communication channels, ensuring a verifiable audit trail for the community.