In a bold move that could reshape the stablecoin landscape, Ethena Labs has officially entered the race to issue USDH, the native stablecoin of Hyperliquid, which is one of the fastest-growing platforms in decentralized finance (DeFi). The bidding war for USDH has attracted some of the industry’s most prominent players.
On Tuesday, September 9, Ethena Labs announced its bid. As the fourth-largest stablecoin issuer in DeFi, Ethena proposes to back USDH entirely with USDtb, a stablecoin linked to BlackRock’s BUIDL fund and issued through Anchorage Digital Bank.
Ethena Labs bolstered its bid with significant financial commitments. The company promised to return 95% of USDH reserve revenue to the Hyperliquid community and cover all costs for transitioning from USDC to USDH. Additionally, Ethena pledged at least $75 million in ecosystem incentives, potentially increasing it to $150 million, to drive adoption and growth.
To address the centralization challenges often faced in DeFi, the proposal introduces a “guardian network” composed of elected Hyperliquid validators. This decentralized framework distributes oversight of USDH across multiple validators, significantly reducing dependence on any single issuer.
The approach contrasts sharply with traditional stablecoin models, where issuers maintain unilateral control over monetary policy and reserves. Industry observers view this governance experiment as potentially influential for future stablecoin designs.
The announcement by Ethena makes it the sixth major contender in what has become an unprecedented battle for stablecoin supremacy. Paxos, Frax Finance, Agora, Native Markets, and Sky previously submitted proposals to Hyperliquid’s validators, who will ultimately decide which entity controls the lucrative USDH contract through community voting.
Each bidder is offering lucrative benefits for the stablecoin. Agora promises to return 100% of reserve revenue to the community, while Sky Ecosystem offers 4.85% yields on Hyperliquid-held USDH. Frax Finance proposed zero take rates with on-chain Treasury bill yields flowing directly to the platform.
“Hyperliquid represents one of the most impressive and important stories to emerge in the last 20 years,” Ethena stated, signalling the strategic importance of this partnership beyond immediate revenue opportunities.
Financial Stakes Drive Aggressive Bidding War
The battle for USDH reflects the platform’s remarkable growth and efficiency. The exchange has captured over 70% of the DeFi perpetuals market, processing up to $400 billion in monthly trading volume with just 11 employees. This efficiency has drawn significant interest from institutional investors, including crypto-focused firms and DeFi platforms, eager to engage with Hyperliquid’s expanding ecosystem
Hyperliquid’s native HYPE token surged to an all-time high of $55.04 as bidding intensified, reflecting investor confidence in the platform’s strategic positioning. The token’s performance underscores how stablecoin partnerships can drive significant value creation for decentralized protocols.
The timing is just right for Hyperliquid, which seeks to reduce dependence on external stablecoins like USDC while capturing treasury yields within its ecosystem. The platform’s leadership views native stablecoin integration as essential for long-term independence and value retention.
Validators will determine the winner following Hyperliquid’s next network upgrade, though no timeline has been announced. The outcome will certainly establish precedent for how next-generation DeFi platforms structure critical infrastructure partnerships while maintaining decentralized governance principles.
