Hyperliquid's USDH: A Challenger to USDC's Dominance?
USDH Arrives: Can Hyperliquid’s New Stablecoin Shake USDC’s $6B Grip?
The race to secure the USDH stablecoin ticker on Hyperliquid [HYPE] has concluded. Native Markets emerged victorious, winning the rights to issue and manage the exchange’s U.S. dollar stablecoin, USDH, after a week of competitive bidding and a validator community vote.
Key Takeaways
Native Markets Secures USDH Ticker
Native Markets won nearly 70% of validator votes in Hyperliquid’s first major on-chain governance process, securing the USDH ticker.
Beating Out Major Firms
The firm outpaced bids from established players like Paxos, BitGo, and Ethena, with prediction markets indicating strong support for Native Markets as the race neared its end.
Native Markets Wins the USDH Ticker
Max Fiege, founder of Native Markets, stated on X that deployment of the USDH HIP-1 and corresponding ERC-20 would occur within days. A testing phase for mints and redeems will begin with an initial group, followed by the opening of the USDH/USDC spot order book and uncapped mints & redeems.
Native Markets submitted the initial proposal for USDH just 90 minutes after Hyperliquid issued the call, refining its plan based on community feedback. The Hyperliquid Foundation abstained from voting, leaving the decision to validators. This contest marks the exchange’s first major on-chain governance vote beyond routine token listings.
Other Competitors
Despite competition from Paxos, BitGo, and Ethena [ENA], Native Markets was the clear frontrunner. On-chain trackers show that its proposal secured approximately 70% of validator votes, compared to 20% for Paxos and 3.2% for Ethena.
Most bidders pledged to direct stablecoin yields back into the Hyperliquid ecosystem, either through contributions to the Hyperliquid Assistance Fund, ecosystem growth initiatives, or direct token repurchases. After Ethena withdrew from the race, prediction markets like Polymarket gave Native Markets over a 99% chance of victory.
Controversy Alert!
The outcome was not without controversy. Critics, including Haseeb Qureshi of Dragonfly Capital, questioned the selection process, raising concerns about fairness and the long-term implications for governance on Hyperliquid.
Quershi observed, “Hearing from multiple bidders that none of the validators are interested in considering anyone besides Native Markets... as though there was a backroom deal already done.”
Will USDH Rule USDC?
With the launch of USDH, Circle’s USD Coin [USDC] faces new competition. DeFiLlama data indicates that nearly $6 billion in USDC reserves remain on the platform, underscoring its entrenched position.
Hyperliquid has stated that USDC and other stablecoins will continue to be supported as quote assets, provided they meet requirements such as a 200,000 HYPE stake (approximately $10 million), a strong peg to $1, and sufficient liquidity depth against both USDC and HYPE.
Market sentiment suggests ripples are already being felt. Circle’s stock has slipped notably since the USDH initiative was announced. The HYPE token has also experienced modest pressure.