Sky Challenges Rivals in Hyperliquid’s USDH Stablecoin Race With $8B Liquidity

Sky enters the USDH stablecoin race on Hyperliquid with bold promises of liquidity, returns, and proven stability.

Key Takeaways

• Sky, formerly MakerDAO, has submitted a proposal to launch USDH on Hyperliquid, competing against Paxos, Frax, Agora, and Native Markets.
• The proposal includes 4.85 percent yield for holders, $2.2 billion in instant liquidity, and a $25 million ecosystem investment.
• Sky offers multi-chain support, a seven-year track record, and the first S&P credit rating (B-) ever given to a DeFi protocol.
• A community vote on September 14, 2025, will determine which protocol wins the lucrative contract.

What Happened?

Sky, the protocol formerly known as MakerDAO, has officially entered the race to issue Hyperliquid’s native USDH stablecoin. With a $8 billion balance sheet, deep ecosystem integration, and an ambitious yield strategy, Sky aims to outpace its competitors in one of the most hotly contested stablecoin contracts in decentralized finance.

The Hyperliquid community will vote on September 14 to choose the winning protocol. The results could reshape the platform’s entire monetary layer.

USDH powered by Sky

The best stablecoin offers so much more than just a stable medium of exchange – it should also deliver highly efficient returns, generated by actively developing, building and growing the ecosystem it lives in.

By using Sky to power USDH, the Hyperliquid…

— Rune (@RuneKek) September 8, 2025

Sky’s USDH Proposal Brings Strong Financial Muscle

Sky’s proposal draws on its extensive infrastructure, including management of over $13 billion in collateral and two major stablecoins, DAI and USDS. With seven years of secure operation and no reported losses for users, Sky brings a reputation few in DeFi can match.

USDH powered by Sky.

• 4.85% rewards on all USDH on Hyperliquid
• 2.2B USDC in instant redemption liquidity
• $8B+ Sky balance sheet ready to deploy
• Backed by Sky’s 7-year track record

Read the proposal by @RuneKek ↓ https://t.co/WYkbHG9Bbc

— Sky (@SkyEcosystem) September 8, 2025

Key features of the proposal include:

• 4.85 percent annual yield on all USDH held in Hyperliquid, exceeding current U.S. Treasury bill returns
• $2.2 billion in instant redemption liquidity via Sky’s Peg Stability Module, providing confidence to institutional traders
• $25 million investment in “Hyperliquid Genesis Star”, modeled after Spark and Grove, which already manage over $6 billion
• Migration of Sky’s buyback engine, which generates over $250 million annually, to Hyperliquid to boost token activity

Sky’s plan also includes multichain access through LayerZero, allowing USDH to function seamlessly across blockchains without relying on external bridges or middleware. Transparency, easy-to-check collateral, and robust risk controls modeled on traditional banking systems were also highlighted in the proposal.

Competitive Landscape Heats Up

Sky is not the only protocol vying for the deal. Four others have submitted aggressive proposals:

• Paxos: Offers 95 percent of reserve earnings for HYPE token buybacks, zero-fee USDC migration, and a focus on global compliance frameworks like the GENIUS Act and MiCA.
• Frax Finance: Pitched a community-first model, returning 100 percent of Treasury profits directly to users.
• Agora: Backed by institutions like State Street and VanEck, it promised full net revenue for HYPE buybacks.
• Native Markets: Emphasized adherence to Hyperliquid rules and in-ecosystem minting, though it faces scrutiny for ties to Stripe’s blockchain ventures.

Hyperliquid itself is a decentralized perpetual exchange with over $5.5 billion in USDC deposits, equivalent to 7.5 percent of USDC’s total supply. The winner of the USDH contract gains access to a highly liquid, fast-growing user base.

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CoinLaw’s Takeaway

Honestly, this is one of the most fascinating contests I’ve seen in the stablecoin space. Sky is not just throwing money at the problem, it’s presenting a full-stack, battle-tested ecosystem with a clear roadmap and institutional credibility. In my experience, when a DeFi player earns a rating from S&P, even if it’s a B(-), that’s a massive vote of confidence. I found their 4.85 percent yield offer particularly bold, especially with real liquidity and transparency behind it. If Hyperliquid’s community wants reliability and scale, Sky makes a very compelling case.