Ethena Enters Hyperliquid’s USDH Issuer Race as Sixth Contender

Ethena Joins Competitive Bidding to Issue Hyperliquid’s USDH Stablecoin

Ethena Labs has entered the contest to become the issuer of Hyperliquid’s USDH stablecoin, marking the sixth proposal in a race to control billions in liquidity on one of decentralized finance’s (DeFi) fastest-growing derivatives exchanges. The announcement came through a blog post on Tuesday, outlining Ethena’s unique bid and strategic commitments.

Ethena’s Proposal and Strategic Commitments

Ethena’s bid centers on a USDH stablecoin fully collateralized by its USDtb token, which is pegged to BlackRock’s BUIDL fund and will soon be issued via Anchorage Digital Bank. If selected, Ethena pledges to return 95% of the reserve revenue generated by USDH to the Hyperliquid community. To enhance security, Ethena plans to establish an elected validator “guardian network” to oversee USDH operations, rather than centralizing control solely with the issuer.

The protocol also commits to funding the migration from USDC to USDH, covering associated costs, and has allocated an initial $75 million in ecosystem incentives, with the potential to increase this amount to $150 million. Further, Ethena plans to partner with Securitize to facilitate tokenized funds and equities on HyperEVM and introduce a synthetic dollar native to Hyperliquid, named hUSDe. The proposal includes leveraging Ethena’s existing stablecoin infrastructure to offer instant liquidity routes.

Context of the USDH Issuer Selection Process

Hyperliquid initiated a community-driven process last Friday to select the USDH issuer, which will command significant liquidity and revenue streams on its platform. Other bidders include Paxos, Frax Finance, Agora (backed by VanEck and MoonPay), Native Markets, and Sky (formerly MakerDAO).

The first proposal came from Native Markets, founded by Hyperliquid advocate Max Fiege, suggesting issuance through Stripe’s Bridge stablecoin processor, though it faced community resistance. Most recently, Sky proposed a USDH backed by its resources offering a 4.85% yield, while Agora pledged to return 100% of USDH reserve revenue back to the Hyperliquid community.

Ethena’s Position in the Stablecoin Market

Ethena recently established itself as the third-largest stablecoin issuer globally, behind Tether and Circle. Its USDe token rapidly scaled to over $12.9 billion in market value within ten months, according to Token Terminal data. The company emphasized that its commitments to Hyperliquid extend beyond winning the USDH issuer role, expressing strong support for the platform’s growth and innovation.

Next Steps and Market Reaction

The final decision on the USDH issuer will be made following Hyperliquid’s upcoming network upgrade, where validators will conduct a formal vote. The upgrade date remains unannounced. Meanwhile, Hyperliquid’s native token, HYPE, reached an all-time high of $55.04 on the day of Ethena’s announcement, reflecting positive market sentiment amid the bidding process.