The race to control one of DeFi’s most valuable stablecoin contracts just gained its most formidable contender. Sky, the decentralized finance giant behind $12.5 billion in stablecoins and formerly known as MakerDAO, submitted its proposal Monday for Hyperliquid’s native stablecoin USDH. The move marks the fifth major entry into a competitive bidding process that began when Hyperliquid announced its stablecoin plans on Discord on Friday.
Sky co-founder Rune Christensen presented his company’s proposal with clear advantages. Sky operates the world’s fourth and fifth-largest stablecoins (USDS and DAI), has seven years of operational experience, and holds the industry’s first B- S&P credit rating (indicating good creditworthiness with some risk). These credentials give Sky a significant edge over competitors.
Sky’s proposal guarantees Hyperliquid will earn 4.85% annually on all USDH stored on its platform – better than what US government bonds currently pay. Users can also swap their USDH for Sky’s USDS stablecoin to earn 4.75% yearly interest, with the ability to use their coins across multiple blockchain networks.
Sky addresses regulatory concerns by offering customization options. The stablecoin can comply with US laws under the GENIUS Act, which prohibits yield payments to stablecoin holders. This flexibility helps Hyperliquid navigate changing regulations.
Christensen promised a $25 million investment to grow DeFi on Hyperliquid. This funding will create exclusive tokens that could generate billions in value for the protocol. The commitment demonstrates Sky’s long-term dedication to Hyperliquid’s ecosystem.
The Battle for USDH Intensifies
Sky is one of several contenders bidding for Hyperliquid’s stablecoin, USDH, and faces strong competition from four other major proposals. Among them is Native Markets, which is also bidding for USDH and is led by prominent Hyperliquid advocate Max Fiege. Established players Frax, Paxos, and MoonPay-backed Agora are also on the bandwagon, each bringing unique strengths to the table.
VanEck CEO Jan van Eck publicly endorsed his son’s Agora proposal, making a direct appeal to the Hyperliquid community. VanEck — a global investment firm known for its early moves into gold, ETFs, and digital assets — has been at the forefront of financial innovation under Jan’s leadership. In his statement, van Eck cautioned against “gang-tackling” tactics and emphasized his family’s long-term commitment to the ecosystem. His public involvement highlights the high stakes and intense competition surrounding the USDH contract.
Hyperliquid, a leading decentralized perpetual futures exchange in DeFi, reportedly processes significant trading volumes, with claims of up to $378 billion monthly, though this figure requires verification. The protocol currently relies on Circle’s USDC and Tether’s USDT for its spot markets. The planned launch of USDH, a native stablecoin, aims to reduce dependency on external stablecoins and unlock new revenue streams through enhanced ecosystem integration.
Paxos, the New York fintech behind PayPal USD and Global Dollar, submitted one of the most notable competing proposals. Paxos plans to use 95% of interest earned from USDH reserves to fund HYPE token buybacks, backing the stablecoin with Treasury bills and repurchase agreements.
The final decision now lies with Hyperliquid’s validators, who will cast their votes following the network’s upcoming upgrade. Each proposal reflects a distinct vision for stablecoin management and long-term ecosystem growth. With Sky entering the race, bringing a track record of stablecoin expertise, the outcome of this vote will help shape the future direction of one of DeFi’s most critical trading platforms.
