Stablecoin Power Shifts from Tech to Strategy in DeFi’s New Gold Rush

The fierce competition for control of USDH, the native stablecoin on Hyperliquid, has underscored a pivotal shift in the stablecoin landscape. As one of the fastest-growing decentralized trading platforms, Hyperliquid’s governance vote to select USDH’s issuer revealed a new era where branding, strategic partnerships, and business incentives are becoming as crucial as technological innovation. The outcome of the vote, awarded to Native Markets, reflects the increasing influence of external backing and regulatory agility in an otherwise competitive market.

Hyperliquid’s validators selected Native Markets—a startup supported by Stripe’s Bridge subsidiary—over well-established players like Paxos and Ethena. This decision was driven in part by Native Markets’ aggressive revenue-sharing terms and its alignment with Stripe’s broader blockchain infrastructure, including the Tempo blockchain and Bridge. Native Markets also pledged to share 100% of its net revenue with Hyperliquid, surpassing the offers from its competitors. This outcome highlights the growing importance of revenue-sharing models in capturing market share within the stablecoin sector, a trend expected to intensify as competition for liquidity and user base becomes more aggressive.

The USDH stablecoin, described as “Hyperliquid-first, compliant, and natively minted,” is expected to reduce the platform’s reliance on USDC and strengthen its position in the decentralized finance (DeFi) ecosystem. With more than $5.6 billion in USDC currently held on the network, the introduction of USDH could significantly shift the flow of reserves and revenue. Analysts estimate that Hyperliquid could benefit from up to $200–220 million in annual revenue from Treasury yields alone if USDH gains traction. This potential revenue stream has made the USDH mandate a strategic priority for Hyperliquid, aligning with its broader goal of reducing dependency on third-party stablecoins.

The contest also brought to light concerns over decentralization and regulatory alignment. While Paxos operates under a New York trust charter and seeks federal licensing, Native Markets emphasized its regulatory flexibility and fast deployment capabilities. Its reserves will be managed by BlackRock and tokenized through Superstate and Bridge, ensuring a robust and transparent system. Meanwhile, critics like Haseeb Qureshi of Dragonfly Capital raised concerns about the transparency of the selection process, suggesting it lacked competitive rigor. Such criticisms reflect broader industry debates about how governance and validator voting power can influence outcomes in decentralized environments.

The USDH victory is part of a broader transformation in the stablecoin sector, where stablecoins are moving from being primarily community-led assets to tools of institutional revenue generation. Unlike earlier days, when technology was the main differentiator, today’s stablecoin competition is increasingly defined by strategic partnerships and financial incentives. For instance, Circle’s collaboration with Coinbase allows it to share proceeds from USDC’s reserves, providing a revenue buffer during market volatility. Hyperliquid’s USDH contest exemplifies this trend, showcasing how stablecoin issuance is becoming a strategic lever for revenue capture and platform growth.

Looking ahead, analysts suggest that fears of centralization may be overstated. While Native Markets’ victory could lead to concerns about vertical integration, the broader DeFi ecosystem is expected to remain neutral and support multiple stablecoins. Hyperliquid has already indicated that it plans to maintain a diverse stablecoin offering, ensuring that USDH complements rather than replaces existing tokens like USDC. This approach aligns with the broader DeFi ethos of openness and interoperability.

The USDH rollout, set to begin with limited minting and redemption trials, will be closely watched for signs of user adoption and validator support. Native Markets has outlined a phased strategy that includes opening the USDH/USDC spot order book and eventually enabling uncapped minting. The platform’s ability to attract liquidity will be a key indicator of USDH’s long-term viability and its potential to capture a significant share of Hyperliquid’s stablecoin economics.

In summary, the USDH bidding war represents a milestone in the evolution of stablecoins. It highlights how strategic alliances, regulatory agility, and financial incentives are now key factors in winning the trust and support of decentralized networks. As Hyperliquid prepares to launch its native stablecoin, the broader industry will be watching closely to see whether USDH can successfully capture the attention—and loyalty—of DeFi users.