Paxos, Frax, Sky, Agora and Native Markets compete for a pivotal role in Hyperliquid’s ecosystem
The battle to issue Hyperliquid’s first native stablecoin, USDH, has drawn some of the biggest names in the crypto industry, with a validator vote set for Sunday. The decision will determine which company controls USDH and gains access to billions in trading volume and stablecoin flows within one of crypto’s fastest-growing exchanges.
Hyperliquid’s rapid rise
Hyperliquid, a decentralized exchange for perpetual futures that launched its own layer-1 blockchain in late 2024, processed $330 billion in trading volume in July with a team of just 11 people. USDH will serve as the platform’s first dollar-pegged asset, offering traders a stable unit of account and collateral option.
The contest has already seen drama. On Thursday, Ethena withdrew its bid and endorsed newcomer Native Markets, leaving Paxos, Frax, Sky, Agora, Curve, OpenEden, and BitGo still in contention.
Native Markets: The frontrunner
Native Markets filed the first proposal on September 5 and has emerged as the favorite, with 96% odds on Polymarket. Formed specifically to launch a Hyperliquid-native stablecoin, the group pledged to mint USDH directly on HyperEVM and split reserve yield between HYPE token buybacks and ecosystem growth.
Its reliance on Stripe’s Bridge tokenization platform won validator support but also sparked criticism from rivals citing potential conflicts with Stripe’s blockchain ambitions.
Paxos: The regulated giant
Paxos, known for launching Binance USD and PayPal USD, entered the race with a proposal that emphasizes compliance with both the US GENIUS Act and EU MiCA regulations. The firm pledged that 95% of reserve interest would be directed toward HYPE buybacks and redistribution to validators and users. Paxos also committed to integrating USDH into its brokerage platform used by PayPal and Venmo. Current odds: 4%.
Sky, Frax, and Agora: Alternative visions
- Sky, the issuer of USDS (formerly DAI), promised to make USDH multichain from day one via LayerZero and to provide a 4.85% return on USDH, with profits directed toward HYPE buybacks and the Assistance Fund. Odds: <1%.
- Frax Finance proposed backing USDH one-to-one with tokenized US Treasurys in partnership with a regulated US bank, pledging to recycle all treasury yield into Hyperliquid’s ecosystem. Odds: <1%.
- Agora, issuer of AUSD, partnered with VanEck as asset manager and promised to direct 100% of net revenue into HYPE buybacks or the Assistance Fund, while criticizing Native Markets’ reliance on Stripe.
The outcome of this vote will shape not only Hyperliquid’s ecosystem but also the broader stablecoin market, as the winning issuer secures a powerful foothold in one of crypto’s most active trading platforms.
With validators set to decide, the race for USDH has become one of the most closely watched governance contests of 2025.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.
