The battle to power Hyperliquid’s native stablecoin is heating up, and Sky just made sure everyone knows it means business. On Monday, Sky—the DeFi heavyweight that most people still know as MakerDAO—submitted its proposal to back USDH, Hyperliquid’s planned stablecoin. It’s the fifth major player to enter what’s turning into a big auction since the decentralized exchange floated the idea on Discord.
Sky’s got the right resume to back up its bid. The company manages $12.5 billion across its USDS and DAI stablecoins, making them the fourth and fifth-largest in the world. They’ve been operating for seven years, and they’re the only ones in crypto with an S&P credit rating.
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Co-founder Rune Christensen didn’t hold back on the proposal. Sky’s offering Hyperliquid a 4.85% annual return on USDH deposits, which is more than what U.S.Treasuries are paying out. Users would also get access to Sky’s USDS stablecoin, where they could earn 4.75% interest.
There’s also the regulatory angle. Sky’s offering to customize the stablecoin so it gels well with laws like the GENIUS Act, which would block issuers from paying yield directly to holders. As regulators circle the industry, this flexibility could prove invaluable.What’s more, Christensen’s putting $25 million on the table to develop DeFi infrastructure on Hyperliquid. The money would go toward creating exclusive tokens that, in Sky’s view, could generate billions in value for the protocol. It’s a clear message: Sky sees Hyperliquid as a long-term partner, not just another client.
But Sky’s hardly running unopposed. Paxos, the New York fintech behind PayPal USD, has put forward one of the strongest competing bids. Their plan involves taking 95% of interest earned from USDH reserves and funneling it into HYPE token buybacks, with the stablecoin backed by Treasury bills and repos. Frax and MoonPay-backed Agora are also in the running.
Hyperliquid’s a big prize. The decentralized perpetuals exchange claims it processes up to $378 billion in monthly trading volume—a figure that’s hard to independently confirm but suggests massive scale.Right now, the platform depends on Circle’s USDC and Tether’s USDT for spot trading. Launching USDH would let them break free from those external dependencies and capture more revenue internally.
The decision rests with Hyperliquid’s validators, who will vote once the network completes its next upgrade. Each proposal represents a different vision for how the stablecoin should operate and what the partnership should look like.
Sky’s entry changes the calculus. With billions under management and years of operational history, they are one of the best bidder yet. One thing’s certain: whoever wins this contract gains serious influence over one of DeFi’s most important trading platforms.
