Ethena Labs has entered the competition to issue Hyperliquid’s USDH stablecoin, promising strong financial incentives and institutional-grade backing.
Key Takeaways
- Ethena proposes to back USDH with USDtb, which is supported by BlackRock’s BUIDL tokenized money market fund.
- 95% of USDH reserve revenue would be returned to the Hyperliquid community if Ethena wins the bid.
- Ethena committed to $75 million in ecosystem incentives, with the potential to increase to $150 million.
- The final vote by validators is scheduled for September 14, with six major contenders including Paxos, Sky, Frax, Agora, and Native Markets.
What Happened?
Ethena Labs has formally submitted a proposal to issue USDH, the upcoming stablecoin for Hyperliquid, one of the fastest-growing decentralized finance (DeFi) derivatives exchanges. The competition includes major players like Paxos, Sky (formerly MakerDAO), Frax Finance, Agora, and Native Markets, and will conclude with a validator vote on September 14.
USDH proposal live on @HyperliquidX Discord.
— Ethena Ecosystem (@Ethena_Eco) September 9, 2025
The Hyperliquid community deserves proven execution in stablecoin scaling.
Should we win, we will do everything we can to ensure USDH can be as successful as USDe and USDtb.
Read more ↓https://t.co/Gqp3Ul2BlH pic.twitter.com/YiVsuLErB1
Ethena’s Ambitious Proposal
Ethena’s proposal stands out for its institutional-grade approach. USDH would be fully backed by USDtb, a stablecoin issued through Anchorage Digital Bank and backed by BlackRock’s BUIDL, a tokenized money market fund launched with Securitize.
Robert Mitchnick, BlackRock’s head of digital assets, endorsed the initiative stating, “USDtb is uniquely positioned to offer institutional-grade cash management and on-chain liquidity to Hyperliquid users.”
Key elements of Ethena’s proposal include:
- 95% of net revenue from USDH reserves will be returned to the Hyperliquid ecosystem.
- A minimum of $75 million in ecosystem incentives, potentially rising to $150 million, to drive adoption and integration.
- Full migration cost coverage from current USDC trading pairs to USDH.
- Launch of Hyperliquid-native synthetic dollar hUSDe using existing Ethena infrastructure.
- Partnerships with Securitize to bring tokenized equities and funds to HyperEVM.
Security and Oversight
To ensure transparency and reduce centralization risks, Ethena also proposed a “guardian network” consisting of elected Hyperliquid validators. This group would be responsible for oversight of USDH, instead of placing full control in the hands of a single issuer.
This decentralized oversight mechanism aims to instill trust within the community, while aligning with Hyperliquid’s ethos of open governance.
Competitive Landscape
The USDH bid has drawn serious attention due to the massive trading volume on Hyperliquid, which reported nearly $400 billion in perpetuals volume last month. Ethena’s entry follows earlier bids from:
- Native Markets, which proposed using Stripe’s Bridge as a payment processor, though the idea faced backlash from the community.
- Sky, whose co-founder Rune Christensen proposed a USDH model offering a 4.85% yield.
- Agora, which pledged to return 100% of reserve revenue back to the ecosystem.
With the final vote just days away, the competition underscores how significant USDH will be for on-chain liquidity, trading efficiency, and DeFi adoption.
CoinLaw’s Takeaway
I’ve been tracking stablecoin developments for years, and Ethena’s bid for USDH is easily one of the most strategic and ambitious moves in recent memory. Backing a DeFi-native stablecoin with a BlackRock-supported asset like BUIDL could bridge the gap between institutional finance and the decentralized world.
In my experience, it’s rare to see a protocol offer such aggressive revenue-sharing and ecosystem incentives. Even more impressive is that Ethena has committed to these benefits regardless of whether they win the bid. That level of confidence and community-first thinking is what sets real contenders apart.
If Hyperliquid wants to scale with reliability, liquidity, and trust, Ethena’s offering might just be the most complete package on the table.
