TLDR:
- Market: Hyperliquid currently has $5.7B in USDC; USDH proposals could generate $220M in a year in HYPE buybacks.
- Narrative: USDH’s hyperliquid stablecoin auction, whose bids come in through Paxos, Frax, Agora, and Native Markets, looks to shake up the monopoly of the USDC. Voting starts September 14, 2025, but risks are regulatory and competitive.
Hyperliquid (HYPE), a premier crypto derivatives DEX, on September 5, 2025, publicly posted a community vote on its USDH stablecoin ticker as opposed to in-house development. Offers were received by Paxos, Frax, Agora, and Native Markets, and there were insinuations by Ethena and Circle’s Jeremy Allaire. USDH will be Hyperliquid’s flagship stablecoin, with transparency, decentralization, and U.S. GENIUS and EU MiCA regulatory compliance, aiming for a share from USDH’s $5.7B (7.86% on-chain supply), currently held by USDC.
- Paxos: Offers 95% reserve yield ($190M/year) for HYPE buybacks, MiCA/GENIUS compliance, USDC-to-USDH swaps, and PayPal/Venmo integrations.
- Frax: Offers 100% APY ($220M/year) to HYPE stakers, frxUSD collateralized USD.
- Agora: Suggests a neutral USDH with Rain and LayerZero, sharing 100% yield via buybacks or Assistance Fund.
- Native Markets: Makes Bridge-backed USDH pitches, but Stripe’s Tempo blockchain connections spark conflict worries.
Voting begins September 14, with a September 10 proposal deadline; Hyperliquid’s foundation will abstain. USDH will coexist with other stablecoins, but success could disrupt USDC. Recent launches like Circle’s Arc and Tether’s Plasma intensify competition. Regulatory hurdles and ecosystem fragmentation pose risks. Investors should watch X sentiment and voting outcomes.
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